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HomeMy WebLinkAboutCD RBR Audit ReportC/TYOF Agenda Item No: 6.b n4 Meeting Date: April 4, 2016 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: COMMUNITY DEVELOPMENT �auz Prepared by: Paul Jensen, City Manager Approval: Community Development Director TOPIC: Residential Building Resale Report (RBR) Program SUBJECT: Report on and review of State of California Performance Audit of the City's Residential Building Resale (RBR) Program EXECUTIVE SUMMARY: In August 2015, the California State Assembly Joint Committee on Legislative Audit (Joint Committee) voted to approve and directed the California State Auditor's Office (State Auditor) to complete a performance audit of the City of San Rafael's Residential Building Resale Report (RBR) Program. The Joint Committee also directed that the State Auditor select and complete a performance audit on the residential resale report programs of two other cities in the State. Since August 2015, the City staff and the City Attorney's Office have been working with the State Auditor's staff in gathering data and information for the performance audit. On March 24, 2016, the State Auditor's performance audit was completed and published. The performance audit report focuses on areas for evaluation such as: the qualifications of City staff (inspectors); an analysis of fees charged for the resale reports; and an assessment of the consistency in reports, their timeliness, and their value. In general, staff felt that the State Auditor recognized the health and safety value of RBR programs and that the recommendations were relatively minor process improvements summarized below. The City Attorney's Office and staff have reviewed and are in general agreement with the recommendations and intends to make the corresponding minor alterations to the RBR Program. As summarized below, staff is seeking direction from the City Council on how to proceed with next steps. RECOMMENDATION: Accept report and provide direction to staff on next steps. FOR CITY CLERK ONLY File No.: 286 Council Meeting: 04/04/2016 Disposition: Accepted Report SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 BACKGROUND: History: In 1973, the City Council adopted Ordinance 1128, which established the City's RBR Program. The provisions and requirements of the RBR Program are presented in San Rafael Municipal Code Chapter 12.36 (Report of Residential Building Record). SRMC Section 12.36.010 requires that prior to the sale or exchange of any residential building, the property owner is required to obtain a "report of residential building record" (resale report) The municipal code prescribes, among others that: ➢ the resale report must contain a statement of the property zoning classification; a statement as to what construction permits are on file with the City as well as what building permits have been issued for work not yet completed; and a statement as to whether there appears to be any nonconformity or illegality in the structures or uses on the property. ➢ A building inspection of the premises must be conducted by the City Building Inspector. ➢ When completed, the resale report must be personally delivered to the seller or their authorized agent. ➢ The buyer of the property or the transferee is required to acknowledge, in writing, receipt and review of the resale report with the City Building Division. While the RBR Program is not a common service and practice in most California cities, this program is administered by all but one jurisdiction in Marin County, the County of Marin. The RBR Programs that are administered vary in process and scope. The Town of Corte Madera and the City of Sausalito administer a program that provides a report of permit records only; these jurisdictions do not conduct an inspection of the property. In 2002, the Marin County Grand Jury issued, "Residential Pre -Sale Inspections — Should Marin County Require Them?" The Grand Jury report recommended that: a) the Marin County Board of Supervisors appoint a committee to consider whether the County should require a resale inspection program; b) the City/Town Attorneys representing the communities that offer the service should review the local inspection practices and local code provisions to make sure that they are in -sync; and c) a study committee (including representatives of the local jurisdictions and Marin Association of Realtors) should be formed to discuss the feasibility of standardizing the pre -sale inspection process. Current RBR Program — Inspection and Report Process: The RBR process that is administered by the City is as follows: An application for a resale report is filed by the property listing agent or the seller (property owner). This application can be filed at the Building Division public counter or on-line. The fee is paid at the time the application is filed. 2. Once the application request is received, a resale report file is opened by the Building Division staff. 3. The Building Division administrative staff checks the permit tracking system every day for new applications. For all new applications received, the Building Division administrative staff enters the basic property information into the City's RBR template (see Attachment 2) to generate a resale report. The property's permit history from the City's permit tracking system and archival database is also collected and entered into the RBR template. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 4. The Building Division administrative staff contacts applicant (listing agent or seller) to schedule a property inspection appointment with the City building inspector. 5. The City Building Inspector completes the property inspection accompanied by the draft resale report. The inspector confirms the permit record corresponds with the observations of property improvements. If unpermitted work or violations are found, they are recorded in the draft resale report (Sections B and C of the RBR template). 6. The resale report is finalized by Administrative staff and issued (posted in the property address file of the City's permit tracking system) and made available for download on-line. 7. The listing agent/seller is responsible for presenting the report to the buyer or the buyer's representative. Per the City code, the buyer must acknowledge to the City that they have received and reviewed the resale report and return the signed buyer's receipt to the City. The City charges a fixed fee for the residential resale report. As presented below, the fee varies based on residential unit type. This fee was last updated by the City in 2009: Single-family residential dwelling: $165.00 Multiple -family residential: - First unit in a multiple -family residential property: $165.00 - Each additional unit in a multiple -family residential property: $50.00 Residential condominium unit: $150.00 The RBR fee that is charged by the other Marin jurisdictions ranges from $113 (Sausalito; report on permit record only) to more than $900 (Ross; report plus multiple -department property inspection). In 2015, the Community Development Department completed a study of the current flat fee for this service. A recommendation to increase the fee for this service was drafted and was to be presented to the City Council concurrent with an increase in the general building permit fees. The study recommended raising the fixed fee for a single-family residence to $250.00. However, as the State Audit already had been commissioned, the proposal to bring forward an increase in this fee was postponed. For many years, the RBR inspections were conducted by the City building inspectors (permanent staff). However, within the last 10 years, this task was shifted to temporary, seasonal employees (generally retired contract inspectors). This shift in staffing was necessary as the building inspection needs for construction projects continued to increase without any increase in inspection staff. On average, annually, the City prepares and issues between 600-700 resale reports. The average is based on the level of activity in the real estate market. In 2015, which was an active year for real estate, 691 resale reports were issued. The greatest value of the RBR Program is that it provides the City with access to our residential inventory to: a) address basic health and safety issues; and b) correct unpermitted work and code violations. Of the total resale reports issued, approximately 55% resulted in required follow-up with the seller/buyer to correct violations and unpermitted work. Corrections to violations and unpermitted work are administered in the following way: ➢ For minor corrections to violations and unpermitted work (e.g., re -roofing, replacement of windows, replacement of water heater or furnace), the seller/property owner is given 15 days to obtain a retroactive permit and inspection approval. No enforcement action is taken if this SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 process is followed in this 15 -day grace period. These minor corrections are noted in Section B of the resale report. ➢ For major violations and unpermitted work (e.g., kitchen/bathroom remodel, accessory structures, additions) and minor corrections not resolved in the 15 -day grace period noted above, the resale report informs the seller/property owner that the City Code Enforcement Division will follow-up by mailing a "Notice to Abate," which sets deadlines for retroactive building permit filing and inspections. These major corrections are noted in Section C of the resale report. Coordination and Work with Marin Association of Realtors (MAR): The Marin Association of Realtors (MAR) has been active in monitoring the RBR programs countywide. MAR has consistently worked with the Marin cities/towns in seeking improvements to the local programs to: a) achieve consistency and standardization in the forms that are used by the jurisdictions; b) improve program efficiency; and c) standardize the inspection practices. In 2012, MAR published a list of "fair practices." The fair practices focused on these improvements as well as improving the timeliness of local resale report process and addressing what has been referred to as "double jeopardy." "Double jeopardy" is a situation encountered by a property owner/seller wherein the resale report will list unpermitted work/improvements that existed prior to their purchase of the property but had not been acknowledged or cited for correction in the prior resale report. Further, the term refers to different inspection standards that may be used by different inspectors, which can result in resale report results that are inconsistent. Following this countywide effort, in 2013-2014, the City worked closely with MAR to mutually develop the "San Rafael RBR Program Policies and Practices." The following are several key elements of the policies and practices that were mutually agreed to: ➢ The City would waive permits for certain unpermitted improvements/work (specifically kitchen and bathroom remodels) if installed and constructed more than 25 years ago (essentially granting amnesty for such improvements). ➢ The City would acknowledge unpermitted work/improvements if completed prior to the date when the City permit requirement was established (essentially "grandfathering" such improvements). ➢ The City would waive fees and penalties for unpermitted work or improvements that were completed prior to the current property owner's (seller) purchase of the property if the corrected item or violation was not noted on the last/prior City -issued resale report (addressing "double jeopardy"). ➢ MAR agreed to urge the real estate professionals to encourage the property owners/sellers tc review their records and submit old plans and permits that may be missing in the City records, so as to resolve and reconcile any resale report inconsistencies. To facilitate a better working relationship with the real estate professionals, in February 2015, the City hosted a "Coffee and Codes" workshop. This workshop was attended by more than 50 real estate professionals. The purpose of the workshop was to provide an opportunity for City staff to explain the City's RBR program and process and to respond to questions from the real estate professionals. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 State Performance Audit Report: As summarized above, in August 2015, the Joint Committee voted to approve and directed the State Auditor to complete a performance audit of the City of San Rafael's RBR Program. The Joint Committee also directed that the State Auditor select and complete a performance audit on the residential resale report programs of two other cities in the State. The audit was ordered at the request of Assembly Member Marc Levine who reported complaints he had received that the RBR program provides "little to no real value to the buyer or seller, are often inaccurate, can needlessly hamper or delay a residential sale, and are often inconsistent with past reports when the property is resold." Since August 2015, the City staff and the City Attorney's Office have been working with the State Auditor's staff in gathering data and information for the performance audit. On March 24, 2016, the State Auditor's performance audit was completed and published. As summarized above, the performance audit report focuses on topic areas for evaluation such as: a) the qualifications of City staff (inspectors) completing the inspections for the resale reports; b) an analysis of fees charged for the resale reports; c) an assessment of the consistency in reports issued to the same property over time; d) the timeliness of the inspections and reports; and e) the value of the resale report to all parties involved in the property sale. A copy of the performance audit report is provided as an attachment to this memorandum (Attachment 1). The performance audit report assessed the RBR programs that are administered by the City of San Rafael, the City of Novato and the City of Pasadena. The performance audit report recommends the following for San Rafael: 1. The City should implement a procedure to assist in monitoring the sale or exchange of properties that require resale reports. The performance audit report also recommends that the City work with the applicable stakeholders (e.g., MAR and real estate professionals) to aid in this effort. 2. To ensure that buyers (new property owners) are aware of the health and safety concerns and any corrections that are needed to address violations, the City should develop a process to ensure that the signed buyer receipts (referred to as "acknowledgment forms/cards" in the audit report) are returned to the City. 3. The City should develop a formal process for tracking, evaluating and resolving "complaints" (e.g., disagreements with the findings of the resale report). Complaints should be recorded in a designated location or database (e.g., RBR file for the property in the Trak -it permit software system). 4. The City should develop formal, written procedures for following-up on correcting violations cited in the resale report. The procedures should identify: • The method in which staff documentation in the database is recorded. • The protocol for ensuring that repeat violations are corrected in a timely manner. 5. To ensure that City staff can identify any repeated violations, the City should review prior -issued resale reports before conducting requested resale record inspections. 6. To ensure that property owners correct violations in a timely manner, the City should: • Develop a work plan by July 2016 to identify and address its enforcement backlog by April 2017 so as to be up-to-date on enforcement actions • Follow-through with its enforcement policies, such as issuing notice letters (e.g., Notice and Order). SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6 • Establish a written process for inspectors to monitor and ensure that property owners correct violations, including accurately identifying properties that have not obtained necessary permits or have not had required re -inspections performed. 7. To ensure that the City conducts the resale inspections and completes the resale reports in a timely manner, it is recommended that the City: • Establish a process to monitor the ability to meet the established time goals from application date to report issuance, including reminders. • Review the time goals by July 2016 and modify them if necessary, factoring in property owner expectations and staff resources to complete reports. If applicable, policies and procedures should be updated to reflect revised time goals. 8. To ensure that the resale record report fees that are charged are appropriate, the City should conduct a formal fee study by December 2016 that incorporates the actual costs associated with the issuance of a resale report by dwelling type. The City should also maintain a time frame to periodically determine whether the fees are commensurate with the cost of administering the RBR program. Documentation used to support the fee should be retained. 9. To ensure that the inspectors conducting the resale inspections are qualified, the City should: • Develop a process to maintain continuing education attendance records, and that staff receive periodic, continuing education so as to stay current on building standards code requirements. • Ensure that staff that is required to have certifications continues to maintain them in good standing to perform their necessary job functions. ANALYSIS: The performance audit report states that the purpose of an RBR program "is to provide consumer protection to home purchasers and to enhance the enforcement of zoning and health and safety regulations before the property's ownership is transferred." (Report, p. 7) Implicitly affirming the importance of the RBR program in advancing these goals, the performance audit report makes specific recommendations for process improvements that the State Auditor believes would make the program even more effective and transparent to the City's property owners. The City Attorney's Office and staff have reviewed the recommendations of the performance audit report. Overall, staff is in general agreement with the recommendations. In fact, some of the recommendations already have been initiated by the Building Division. Further, most of the recommendations would formalize improvements to the report procedures and improve permit record housekeeping. Should the City Council accept this report, staff will proceed with implementing these recommendations, which would include coordination with the Marin Association of Realtors. Please note that moving forward with a work program to implement these recommendations will include returning to the City Council with a recommendation to amend the RBR application fee. As noted above, last year, staff was prepared to propose a fee increase, but it was postponed pending the completion of the performance audit report. The recommendations presented in the performance audit report will have to be factored into a recommended fee increase as they would involve some additional staff time (e.g., tracking down the return of signed buyer receipts). Any proposed fee increase or policy recommendations recommended by Staff will be brought to the Council for consideration in due course. As noted above, while the RBR Program is a common service among Marin County jurisdictions, it is not a common service or practice in most California cities. The program is not required by State law, SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7 but it has been in-place in San Rafael since 1973. Should the City Council wish to review and re -visit the RBR Program, direction should be given to staff to return with a report on program options (e.g., continuing the program as currently administered, eliminating the program, or changing the scope of the program). COMMUNITY OUTREACH: Upon receipt of the performance audit report, the City published a press release noting the availability of the report and scheduled City Council review of this matter. In addition, City staff contacted and met with the Marin Association of Realtors (MAR representatives to discuss the report findings and recommendations). FISCAL IMPACT: The recommendations presented in the performance audit report have some fiscal impacts on the City of San Rafael. State law stipulates that municipalities can recover costs for direct services (e.g., for administering the RBR Program) provided that a study has been prepared (and adopted by the City Council) demonstrating that such charges do not exceed the cost of service delivery. As noted above under the Analysis section of this report, an increase in the RBR application fee had been studied in 2015 to update the City cost to administer the current program. The fee increase would also need to factor in implementation of the recommendations presented in the performance audit report. OPTIONS: The City Council has the following options to consider regarding this matter: 1. Accept the report and direct staff to proceed with the recommendations of the audit report; or 2. Direct staff to return with RBR Program options for review and consideration; or 3. Direct staff to return with more information. RECOMMENDED ACTION: Accept report and provide direction to staff on next steps. ATTACHMENTS: 1. California State Auditor's Performance Audit Report and Fact Sheet, March 24, 2016. 2. City of San Rafael RBR template form with checklist (resale report) 3. City of San Rafael RBR Program Policies and Practices ATTACHMENT CALIFORNIA STATE AUDITOR REPORT ON RESIDENTIAL BUILDING RECORDS (FACT SHEET AND REPORT) FACT SHEET Elaine M. Howie State Auditor CONTACT: Margarita Famindez 1, (916) 445-0255, x343 i MargaritaF@auditor.ca.gov The California State Auditor released the following report today: Residential Building Records The Cities of San Rafael, Novato, and Pasadena Need to Strengthen the Implementation of Their Resale Record Programs BACKGROUND At least 9 percent of the cities in California, which are home to 17 percent of the State's population, have a resale record ordinance—a local rule specifying that before the sale of any residential building, the owner or authorized agent obtains from the city, a report showing a variety of information concerning the property. Although cities may have similar programs, their ordinances may apply to different properties. KEY FINDINGS During our review of the resale record programs in San Rafael, Novato, and Pasadena, we noted the following: • All three cities are not fully complying with their respective resale record ordinances. ✓ None have procedures in place or are monitoring to identify properl:ies that are sold or exchanged. ✓ For 10 of the 17 properties we reviewed, Pasadena's records for inspection certificates—related to health and safety—were initially missing. The city subsequently was able to find the certificates, but four were incomplete. ✓ San Rafael and Novato could not demonstrate in certain instances that buyers are aware of health and safety violations that exist at their new properties. None of the three cities have formal processes to address complaints consistently nor do they track complaints they receive or their resolution. • Although the three cities have policies and procedures for following up on inspections that identify violations requiring action from property owners, none of the cities consistently follow them and each city has a backlog of properties with unresolved violations that require permits or reinspection. • San Rafael and Pasadena did not always meet their established time goals for their resale record programs, and Novato did not fully establish time goals. • The fees charged by each of the cities for their resale record programs were developed many years ago and do not cover the cost of the program. As a result, the cities are likely undercharging for inspections. KEY RECOMMENDATIONS We made several recommendations to the three cities, including the following: • Ensure they are aware of whether property owners comply with ordinances by implementing procedures to monitor the sale or exchange of properties that require resale record inspections and verify that new property owners are aware of health and safety concerns regarding their property. • Monitor stakeholders' satisfaction with their respective resale record programs and implement a formal complaint resolution process. • Ensure property owners correct violations in a timely manner and that the three cities establish a process to monitor how well they are meeting their established time goals from application date to report issuance. • Conduct formal fee studies if needed and ensure the resale record fees the cities charge are appropriate. • Enable staff to remain current on building standards code requirements by ensuring they receive periodic continuing education. Date: March 24, 2016 Report: 2015-134 621 Capitol Mall, Suite 1200 1 Sacramento, CA 95814 1 916.445.0255 916.327.0019 fax I wvwvv.auditor.ca.gov ' duuin„ (..-st-iYLa2�tat. elf) State Auditor March 2016 Residential Building Records The Cities of San Rafael, Novato, and Pasadena t Need to Strengthen the Implementation of Their g p Resale Record Programs Report 2015-134 The first five copies of each California State Auditor report are free. Additional copies are $3 each, payable by check or money order. You can obtain reports by contacting the California State Auditor's Office at the following address: California State Auditor 621 Capitol Mall, Suite i2oo Sacramento, California 95814 916.445.0255 or TTY 916.445.0033 OR This report is also available on our website at wwwauditor.ca.gov. The California State Auditor is pleased to announce the availability of an online subscription service. For information on how to subscribe, visit our website at www.auditor.ca,gov. Alternate format reports available upon request. Permission is granted to reproduce reports. For questions regarding the contents of this report, please contact Margarita Fernandez, Chief of Public Affairs, at 916.445.0255• For complaints of state employee misconduct, contact the California State Auditor's Whistleblower Hotline: 1.800.952.5665• State Auditor March 24, 2016 The Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814 Dear Governor and Legislative Leaders: Elaine M. Howie State Auditor Doug Cordiner Chief Deputy 2015-134 As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the administration of residential building record (resale record) programs by the cities of San Rafael, Novato, and Pasadena. These cities each have a resale record ordinance requiring owners of residential properties to obtain from the city a review of the property's records, including an inspection for health and safety violations, prior to the sale or transfer of the property. Each city summarizes its review by preparing a resale record report (report), which identifies violations of the California Building Standards Code (code) and local regulations. The cities can require the property owner to correct the violations and, if necessary, obtain the appropriate building permits from the city and a reinspection of the property. This report concludes that the cities need to strengthen several aspects of their resale record programs to foster property owners' compliance with local laws and to address lingering health and safety risks. Specifically, the three cities are not actively monitoring sales and transfers of residential properties, which limits their ability to ensure that inspections are performed as required. In addition, the cities do not have formal processes for addressing complaints in a consistent manner, as well as tracking the complaints they receive and how they are resolved. Moreover, the cities do not consistently follow up with property owners on the correction of violations identified during the inspections, despite having policies to do so. In fact, we noted that each city has a significant backlog of properties with unresolved violations requiring permits or reinspections. The three cities have various goals for completing inspections and issuing reports within specific time frames, although we identified several instances where San Rafael and Pasadena did not meet their time goals. In contrast, Novato met its time goal of 10 business days from the inspection date to the report issuance date for those properties we reviewed, although we conclude that this goal appears to be much longer than the city needs. Further, our analysis of and subsequent inquiries about the cities' current fee structures for single-family and condominium dwellings—the most common types of fees charged—ultimately determined that the three cities are likely undercharging property owners for these inspections. We also determined that most of the inspection staff the cities employed during the past five years either met or exceeded the minimum qualifications for their positions. Although resale record inspectors at the three cities have attended continuing education sessions regarding building standards, the cities do not keep attendance records and have not established continuing education requirements to ensure that their staff remain current on code requirements. Respectfully submitted, E,�O� %n, ELAINE M. HOWLS, CPA State Auditor 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.auditor.ca.gov Blank page inserted for reproduction purposes only. California State Auditor Report 2015-134 V March 2016 Contents Summary Introduction 7 Audit Results The Three Cities Are Not Fully Complying With Their Respective Ordinances and Policies for the Residential Building Record Programs 15 The Cities Do Not Have Formal Processes to Address Complaints in a Consistent Manner 20 The Cities Have Not Consistently Ensured the Correction of Violations, Resulting in Backlogs and Lingering Health and Safety Risks 24 Two Cities Did Not Always MeetTheirTime Goals, and the Other City Did Not Fully Establish Goals 29 The Cities Lack Processes to Demonstrate the Appropriateness of-rheir Fees 32 Although Inspectors Are Qualified, the Cities Do Not Have Standards for Continuing Education and Do Not Maintain Supporting Records 35 Recommendations 38 Responses to the Audit City of San Rafael 43 California State Auditor's Comment on the Response From the City of San Rafael 45 City of Novato 47 California State Auditor's Comments on the Response From the City of Novato 53 City of Pasadena 55 California State Auditor's Comments on the Response From the City of Pasadena 61 California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-134 March 2016 Summary Results in Brief the cities of San Rafael, Novato, and Pasadena have each adopted a residential building record (resale record) ordinance that requires property owners who intend to sell their property to obtain a review of the city's records of that property, including an inspection for health and safety concerns, before the sale or transfer.' More specifically, the ordinances of San Rafael and Novato require that property owners of single-family dwellings and multifamily dwellings obtain an inspection of the property from the city and that the city prepare a resale record report (report) and make it available to prospective buyers before the sale of the property. Pasadena's ordinance requires that a property owner obtain a city inspection of the property and that the city issue a Certificate of Inspection (inspection certificate) before the property is transferred. If Pasadena identifies violations during the inspection, it issues a report to the property owner and follows up on corrections of the violations before issuing the inspection certificate? The reports for all three cities identify violations of the California Building Standards Code (code) and their municipal codes. The code identifies a wide range of building requirements, from regulating electrical work to requiring that handrails be a specific height. If the cities identify violations, they can require the property owner to correct the violations and, if necessary, obtain the appropriate building permits from the city. The three cities we reviewed are not fully complying with their respective resale record ordinances. Specifically, none have procedures in place or are monitoring to identify properties that are sold or exchanged, which limits their ability to ensure that inspections are being performed as required. In addition, Pasadena's records for inspection certificates were missing or incomplete for io of the 17 properties we reviewed that had application dates from July 2,014 through October 2-oi5. Without an inspection certificate, the city lacks assurance that the property is in compliance with the ordinance related to the health and safety of its residents. Furthermore, San Rafael and Novato are unable to document in certain instances that buyers are aware of health and safety violations that exist at their new properties, as their respective ordinances require. According to the three cities, their priority is Pasadena's ordinance is known as the inspection ordinance, and its application is triggered when a property is vacated and then reoccupied. For the purpose of this audit report, we refer to it and the program the city administers—the Occupancy Inspection Program—as resale record ordinance and resale record program. If the property owner wants to sell the property "as is"the buyer can sign a Transfer of Responsibility form (transfer), which states that he or she will resolve any outstanding code violations, When the city receives a signed transfer, it issues a temporary inspection certificate. Audit Highlights... Our audit concerning the administration of residential building record (resale record) programs by the cities of San Rafael, Novato, and Pasadena revealed the following: » The three cities are not fully complying with their respective resale record ordinances and policies. » None of the cities have procedures or are monitoring to identify residential properties that are sold or exchanged. » The cities do not have formal processes to address complaints consistently not do they track the complaints they receive or their resolutions. » Although the cities have policies for following up on inspections that identify violations requiring action from property owners, none of the cities consistently do so. » Each city has,o significant backlog of properties with unresolved violations that require permits or reinspection. » The cities established time goals for their resale record programs, but they are not monitoring compliance with them, and San Rafael and Pasadena did notalways meet their goals. » The cities are likely undercharging property owners for inspections of single-family and condominium dwellings. » The cities have not established continuing education requirements to ensure that their staff remain current on California Building Standards Code requirements. California State Auditor Report 2015-134 March 2016 conducting inspections and identifying violations, and the owners are responsible for requesting and obtaining the appropriate documents. However, because each city requires that property owners obtain certain documents before the sale or exchange of a property and the cities have specific responsibilities, we believe the cities should take steps to monitor compliance with their local laws, such as working with their county assessors to be aware of property transfers. In addition to not complying with all aspects of their ordinances, none of the three cities have formal processes to address complaints consistently nor do they track the complaints they receive or their resolutions. For the purpose of our review, we defined a complaint as a statement of dissatisfaction with an action or request the city made of a property owner pertaining to the program. The lack of formal complaint processes raises concerns about the cities' ability to readily demonstrate fairness and appropriateness in resolving complaints. We also noted that none of the three cities have a designated location in their databases for documenting information about complaints and resolutions. Furthermore, although San Rafael, Novato, and Pasadena have policies and procedures for following up on inspections that identify violations requiring action from property owners, none of the cities consistently follow them. Specifically, for violations that require permits or reinspection, the cities should be issuing a reminder letter (notice letter) to the property owners of the. corrections needed and then monitoring the promptness of owners' correction of the violations. Despite these policies, each city has a backlog of properties with unresolved violations that require permits or reinspection. Novato and Pasadena generated reports that identified numerous cases—more than 300 in Novato over the past nine years and nearly 4,600 in Pasadena during the past 1s years—that appear to still have outstanding violations from an inspection. However, we identified some cases within Pasadena's report in which the violations appear to have been resolved, so the actual number of resale record cases with outstanding violations is likely less. San Rafael cannot generate a summary report to identify all properties with outstanding violations because it did not identify the status of inspections of its resale record cases in its database until December 2ois, However, it estimated that the backlog of properties with unresolved permit violations was about iso cases as of November aois for properties that had resale record inspections in aois. San Rafael does not know how many cases may still have unresolved violations until staff review each of the older cases in its database. The three cities cite staff workload as the primary cause of their backlogs, although they have taken some California State Auditor Report 2015-134 March 2016 action over the past two years to temporarily bolster their efforts at directing property owners to correct violations. However, they need to take more action. The cities have established time goals for their resale record programs, but they are not monitoring compliance with them, and San Rafael and Pasadena do not always meet their goals. San Rafael and Pasadena have a time goal that measures the date an individual submits an application for the resale record report to the date of the inspection of the property (application to inspection), and then from the inspection date to the date the report is issued (inspection to report issuance). San Rafael's goal is 12 business days from application to inspection and two business days from inspection to report issuance. Pasadena's goal is seven calendar days from application to inspection and one calendar day from inspection to report issuance. Novato measures only the period from inspection to report issuance with a goal of 10 business days. Based on our review of 20 resale record reports from each city that were initiated from July 2014 through October 2015, San Rafael and Pasadena had some instances where they did not meet their goals, ranging from one to two additional business days and two to 20 additional calendar days, respectively. Novato met its time goal of 10 business days from inspection to report issuance for all 20 properties we reviewed, although this goal appears to be much longer than the city needs. The three cities have based the fees they charge for their resale record programs on cost studies that were prepared many years ago. Additionally, San Rafael and Pasadena were unable to provide the detailed support for the cost studies they used to establish their fees. Novato was able to produce the detailed support for its current fees, but it did not perform an analysis until January 2016 at our prompting, in which it concluded that the city had subsidized its program by $30,200 in fiscal year 2014-15. To assess the reasonableness of the cities' current fees, we calculated the basic. costs the cities incur to conduct an inspection. Our analysis showed that San Rafael and Novato are likely undercharging for inspections of single-family and condominium dwellings, which are the most common types of fees these cities charge. However, we could not determine if Pasadena was undercharging property owners because it was unable to quantify its overhead costs pertaining to the resale record inspections. Subsequent to our closing conference, Pasadena provided us with a draft cost study in which its consultant concluded that the city is currently undercharging for inspections. The city relied on the consultant's expertise to identify overhead costs, which the consultant was able to extract from the city's accounting system. California State Auditor Report 2015-134 March 2016 Finally, we determined that most of the resale record inspection staff the cities employed during the past five years either met or exceeded the minimum qualifications for their positions. We were unable to verify the qualifications of one former city employee and three contracted inspectors in San Rafael because the city did not have the applicable supporting records. The responsibilities of resale record inspection staff vary among the three cities, which accounts, for differences in the minimum job qualifications each city established. Although resale record inspectors at the three cities have attended continuing education sessions regarding building standards, the cities have not established continuing education requirements to ensure that their staff remain current on code requirements. Because these code requirements are subject to change and have changed every three years, the frequency of these changes directly impacts the inspectors' responsibilities, which emphasizes the importance of participating in relevant continuing education. Recommendations To ensure that the cities are aware of the degree of property owners' compliance with the cities' ordinances, San Rafael, Novato, and Pasadena should implement procedures that can help them monitor the sale or exchange of properties that require resale record inspections. San Rafael and Novato should also develop a process to verify that new property owners are aware of health and safety concerns regarding their property and any corrective actions they need to make. In addition, Pasadena should develop a process to ensure that staff sign the inspection certificates and add them to the city's database. To ensure that the three cities can monitor stakeholders' satisfaction with their respective resale record programs and to ensure that they each have a uniform approach for resolving complaints, San Rafael, Novato, and Pasadena should develop a formal process for tracking the types of complaints they receive and how well they resolve those complaints. To ensure that property owners correct violations in a timely manner, each city should develop a work plan by July 2o3.6 to identify and address its respective enforcement backlog by April 203.7, so that the cities are up to date with their enforcement actions, such as issuing notice letters and monitoring property owners' actions to resolve violations. To ensure that the cities conduct their resale record inspections and complete the reports in a timely manner, they should establish a process to monitor how they are meeting their established time California State Auditor Report 2015-134 March 2016 goals from application date to report issuance, such as developing a reminder report or using an automated feature of their databases. Novato should also establish an expectation that is significantly shorter than io business days for the period from inspection to report issuance; further, it should establish a time goal for the period of application to inspection. To ensure that the resale record fees the cities charge are appropriate, San Rafael should conduct a formal fee study by December 2o16 that incorporates the actual costs associated with the issuance of a resale record report by dwelling type, and Pasadena should finalize its formal fee study by April 2o16. All three cities should develop a process to maintain continuing education attendance records and ensure that staff receive periodic continuing education through internal and external sources to enable them to remain current on code requirements, especially when the requirements are updated. Agency Comments San Rafael and Novato generally concurred with our recommendations. However, Novato questioned the feasibility of monitoring property owners' compliance with certain aspects of its resale record ordinance, but the city stated it will explore options to implement the recommendation. Although Pasadena also concurred with most of our recommendations, it disagreed with a few of them because the city believes its current processes are sufficient. California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-134 7 March 2016 Introduction Background Since 1969 state law has authorized California cities to implement and administer a residential building record (resale record) program. The California Government Code states that a city may adopt a local ordinance specifying that before the sale of any residential building, the owner or authorized agent shall obtain from the city a report of the resale record showing a variety of information, such as the regularly authorized use, occupancy, and zoning classifications of the property. The intent of the law is to provide consumer protection to home purchasers and to enhance the enforcement of zoning and health and safety regulations before the property's ownership is transferred. To identify the health and safety violations, the cities enforce the regulations of the California The California Building Code requires a permit Building Standards Code (code) and other when an owner or authorized agent: municipal codes. The code identifies a wide range of building requirements, from regulating electrical Constructs, enlarges, alters, repairs, moves, demolishes, or work to requiring that handrails be a specific changes the occupancy of a building or structure. height. In addition, as presented in the text box, Erects, installs, enlarges, alters, repairs, removes, the code requires that the property owner obtain converts, or replaces any electrical, gas, mechanical, or permits for any additions or modifications to plumbing system. existing structures. If a city identifies during a resale record inspection that a property had unpermitted Source; CaliforniaBuildingCode,Section 'rhe work, the city may require the property owner to Note; California Building Standards Code is composed of dein 12 parts, one of which is the California Building Code. obtain the appropriate permits after the fact. In addition, cities may choose to include reviewing compliance with aspects of their municipal codes as part of the inspections. For example, Pasadena includes checking for defects or lack of weather protection for exterior wall coverings as one of its inspection items. Not all cities have resale record ordinances and the requirements of the ordinances of those that do vary as do the programs' administration and requirements. For example, some cities issue a resale record report (report) that identifies the permits associated with a property, but some of these cities do not conduct physical inspections of those properties, In other cities, staff inspect only the exterior of the property. Although no comprehensive list of cities with a resale record ordinance exists, we identified at least 43 cities with such an ordinance, representing a minimum of 9 percent of the cities in California. As of January 2oi5 these 43 cities represented an aggregate population of 6.77 million people, which is equivalent to 17 percent of the State's population. These cities are primarily located in counties that are clustered in the Bay Area and in Southern California. For example, each of the California State Auditor Report 2015-134 March 2016 ii cities in the county of Marin has a resale record ordinance, and at least ig of the 88 cities in the county of Los Angeles have such an ordinance. Overview of State Resale Record Ordinances and Programs The audit request asked the California State Auditor to review the resale record program in San Rafael and two other cities. We selected Novato and Pasadena for review because the primary characteristics of these cities' resale record programs align closely to the issues addressed in the audit objectives. Specifically, the audit asked us to evaluate aspects of the programs that involve inspections, including the qualifications of the inspection staff and the timeliness of the cities' issuance of a report after an inspection. All three cities perform interior and exterior inspections, which require different staff qualifications than those for a city that performs only one of those types of inspections. Further, the audit objectives asked us to evaluate the consistency of the resale record reports and the objectivity of the complaint process. We determined that the housing in Novato and Pasadena shares similar characteristics to San Rafael's housing, which would provide context for the nature and resolution of the complaints. Although the three cities' resale record programs are similar, their ordinances apply to different types of properties. The ordinances of San'Rafael and Novato require that property owners of single-family dwellings and multifamily dwellings obtain an inspection of the property from the city and that the city prepare a report and make it available to prospective buyers before they sell the property. In contrast, Pasadena's ordinance requires inspections of single-family dwellings or duplexes when the units are reoccupied, sold, rented, leased, or exchanged. This inspection requirement does not apply to dwellings of three or more units, which includes boarding or rooming houses. Table 1 presents a summary of the three cities' resale record program administration and compares those programs, In addition, these three cities have developed similar processes for each stage of the resale record program. Figure 1 on page io illustrates the overview of their processes. One difference is that Pasadena issues a Certificate of Inspection (inspection certificate) to the property owner when violations do not exist or have been corrected. The inspection certificate authorizes occupancy of the property. In contrast, in San Rafael and Novato, if the inspection identifies violations, the property can be occupied but the cities expect the seller or buyer will assume responsibility for correcting the violations, California State Auditor Report 2015-134 March 2016 To communicate the results of the resale record inspections, the cities use report templates to provide consistency in the contents of the reports. The reports include health and safety and municipal code violations and specify whether those violations require permits. For example, the three cities all require smoke detectors to be installed in dwellings, but they do not require property owners to obtain permits for them. In contrast, most construction and alteration activities require a permit before the construction begins. Table 1 Summary of the Three Cities and Their Residential Building Record Programs Year the city adopted the resale record ordinance City population as of January1,2015 Age of housing stock Staffing levels and responsibilities SAN RAFAEL NOVATO PASADENA' 1973 1987 1973 59,214 53,575 141,510 Approximately 77 percent of the Approximately 68 percent of the Approximately 77 percent of the properties were built before 1980; properties were built before 1980; properties were built before 1980; 62 percent were built before 1970, 39 percent were built before 1970. 65 percent were built before 1970. The primary residential building record (resale record) inspector is a seasonal, part-time employee. The administrative assistant researches the property permits and prepares the report template for the inspector with the preliminary property information. Number of resale record 687 inspections in calendar year 2015t The primary resale record inspector is a full-time employee. The inspector conducts all the property history research, including reviewing prior resale record inspection reports. There are three full-time employees who perform resale record inspections in addition to other city program inspections, such as the quadrennial inspections of multifamily dwellings. The staff assistant processes the resale record applications and prints out property permit history for the inspector to review. 1,797 Sources: Cities of San Rafael, Novato, and Pasadena; California Department of Finance, and the United States Census Bureau. Pasadena's resale record program ordinance is known as the inspection ordinonce.The ordinance requires inspections of properties that are single-family dwellings or duplexes when the property or units are sold, rented, leased, or exchanged and thereafter reoccupied. This resale inspection requirement does not apply to dwellings of three or more units, which includes boarding or rooming houses. In contrast, San Rafael's and Novato's programs involve inspections of all single-family dwellings and multifamily dwellings when these properties are being sold or exchanged, but not when properties are rented or leased. t We did not assess the reliability of the background data for the number of resale record inspections the cities conducted in 2015. If the city misses unpermitted construction or remodel work when conducting a resale record inspection but it identifies the violation during the inspection for a subsequent resale, the current homeowner may be responsible for bringing the property into compliance. San Rafael and Novato do not charge the owner permit fees or penalty fees for that unpermitted construction or remodel work if the city acknowledges that the violation should have been noted in a prior report. In contrast, Pasadena does charge permit fees in such circumstances. The property owner shall make the corrections. • San Rafael and Novato—take no further action. • Pasadena—if the city identifies the violation as being minor, the property owner must resolve the violations and sign the report to confirm resolution of the violations.t The property owner will then submit the signed report to the city. If the city identified only minor violations during the resale record inspection, the city will then issue an inspection certificate. If the city identifies the violation as being major, the property owner must resolve the violation and request that the city perform a reinspection. Once the city conducts the reinspection and detpl no violations exist, the city issues bbii �dol certificate. The city issues a letter or report identifying the violations to the property owner. The property owner obtains the appropriate permits. San Rafael and Novato— take no further action. Pasadena—the city issues an inspection certificate. Resale record C,Ty— comp etes a "nd issues the resale record report (report). 0 Property owner or City schedules inspector inspects the interior and exterior of selling agent completes an inspection. the ro ert and p. y. San Rafael—the buyer and seller y homeowner's an application for residential building identities violations of sign a card to that the received the acknowledge they record (resale record) the California Building Standards Code and report. Theller then the inspection. city ordinances. homeowner's card to the city. • Novato—the buyer signs the homeowner's card to acknowledge that he or she received the report. The seller then submits the homeowner's card to the city. Property owner Pasadena—the property owner does not need to take any obtains a Certificate of Inspection (inspection certificate) before he or additional action. a ed. she can reoccupy, change the use of, sell, exchange, rent, or lease San Rafael and Novato—take no a property.' further action. • Pasadena—the city issues an inspection certificate. The property owner shall make the corrections. • San Rafael and Novato—take no further action. • Pasadena—if the city identifies the violation as being minor, the property owner must resolve the violations and sign the report to confirm resolution of the violations.t The property owner will then submit the signed report to the city. If the city identified only minor violations during the resale record inspection, the city will then issue an inspection certificate. If the city identifies the violation as being major, the property owner must resolve the violation and request that the city perform a reinspection. Once the city conducts the reinspection and detpl no violations exist, the city issues bbii �dol certificate. The city issues a letter or report identifying the violations to the property owner. The property owner obtains the appropriate permits. San Rafael and Novato— take no further action. Pasadena—the city issues an inspection certificate. California State Auditor Report 2015-134 1 1 March 2016 Bringing a property into compliance can include performing the construction work needed to bring the property up to the code's requirements and obtaining permits for this work. Seeking a permit and performing compliance work can be costly for the owner, especially if he or she needs to obtain architectural drawings. According to San Rafael's community development director, whether the city requires architectural plans depends on several factors including structural concerns, elevation concerns, or concerns about potential hazards. For example, a deck built 20 years earlier without permits might appear to be structurally sound, but the city might require architectural plans to evaluate the safety of the structure. If performing repair work and obtaining a permit cannot remedy the violation, the property owner will need to remove or tear down the construction or remodel the work that was done. For example, a basement that a property owner converted into living space cannot be remedied if it does not have a fire exit. In this situation, if the owner is unable to provide the exit, he or she will have to remove all modifications that were made. Scope and Methodology The Joint Legislative Audit Committee (audit committee) directed the California State Auditor to perform an audit of different aspects of three cities' resale record programs, including the qualifications of resale record inspection staff, reasonableness of fees, compliance of policies and procedures with applicable laws and regulations, consistency of resale record reports, and method of resolving complaints. Table 2 includes the audit objectives the audit committee approved and the methods we used to address them. 12 California State Auditor Report 2015-134 March 2016 Table 2 Audit Objectives and the Methods Used to Address Them AUDIT OBJECTIVE METHOD 1 Review and evaluate the laws, rules, Reviewed relevant state laws and regulations. and regulations significant to the and the time spent on those tasks. audit objectives. Obtained and reviewed hourly rate information for staff who are responsible for processing resale 2 Assess the qualifications, experience, For the individuals who primarily performed residential building record (resale record) inspections in and training of San Rafael staff and the time period from 2010 through 2015, we completed the following: staff in the selected cities (Novato and Interviewed relevant city staff. 001 Pasadena) conducting inspections for Judgmentally selected 20 resale record reports (reports) that the property owners of each of the three .the reports. Obtained and reviewed the inspectors'personnel records and the minimum qualifications for Pasadena) issued for residential their positions. buildings, assess the effectiveness Compared the inspectors'personnel records to the minimum qualifications for their positions to of each city's applicable policies, determine whether the inspectors had met the minimum qualifications for their positions, procedures, and processes by Obtained and reviewed trainings inspectors attended from July 2014 through November 2015. performing the following: Reviewed trainings related to the California Building Standards Code (code) that are available a. Review and evaluate the contents from the California Building Officials Training Institute, California Building Standards Commission, of reports to determine whether and California Association of Code Enforcement Officials to determine classes available that could they comply applicable laws, enhance the inspectors'knowledge of the code. 3 Determine the reasonableness of Obtained and reviewed the cities'fee studies and supporting documentation. report fees by reviewing the costs Interviewed relevant city staff to determine what tasks they perform for the resale record program San Rafael and the selected cities and the time spent on those tasks. (Novato and Pasadena) incur to issue the reports. Obtained and reviewed hourly rate information for staff who are responsible for processing resale records.The rate information included salaries, benefits, and, if available, overhead costs. Calculated and evaluated the cities'costs against the fees the cities charge for their resale record programs. 4 For a selection of reports San Rafael Judgmentally selected 20 resale record reports (reports) that the property owners of each of the three and the selected cities (Novato and cities initiated from July 2014 through October 2015 for review to perform the following steps: Pasadena) issued for residential buildings, assess the effectiveness of each city's applicable policies, procedures, and processes by performing the following: a. Review and evaluate the contents Reviewed the cities'ordinances relevant to resale records, and reviewed the code established of reports to determine whether in 2013, they comply applicable laws, , Evaluated these reports to determine whether the permit violations the cities identified complied regulations,, and d policies. with the code and the cities' ordinances and policies, We determined that the three cities'reports identified violations that were consistent with the requirements of the code. Our discussion of the extent to which the cities did not comply with their ordinances and policies and procedures is presented in the Audit Results. Interviewed relevant city staff. b. Determine the length of time Reviewed the cities' policies and procedures related to their timeline goals from application to from submission of the report inspection and inspection to issuance of a report. application to inspection and Evaluated these 20 resale records against the cities'timeline goals to determine how well the cities report issuance to assess San Rafael complied with their stated timeline goals. and the selected cities'(Novato and Pasadena) compliance with the Interviewed relevant city staff. timelines contained in each city's respective policies. California State Auditor Report 2015-134 13 March 2016 AUDIT OBJECTIVE METHOD 5 For a selection of residential buildings Obtained and reviewed all of the reports for the 20 property addresses we judgmentally selected for resold more than once, evaluate review for each city. Obtained the reports from each city's database records and archive files, including San Rafael's and the selected cities' microfiche records to perform the following steps: (Novato and Pasadena) compliance and to determine if the cities resolved the complaints objectively, with relevant laws, regulations, and policies by performing the following: Reviewed the cities' policies and procedures relevant to resolving report complaints. a. Comparatively analyze reports Identified the corrections, violations, and unpermitted work the cities noted in the reports. issued for sales of the same We then evaluated the reports for consistency of information among the reports. We determined buildings to evaluate consistency. that the three cities'reports issued for the same properties did not have material inconsistencies. of facts. Interviewed relevant city staff. b. Based on a review of any Obtained and reviewed a list of complaints that occurred between 2002 and 2015 from each of the complaints related to the selected cities and from the local realtor associations. We did not identify complaints related to the items buildings and a selection of selected as part of Objective 5a. complaints related to other Judgmentally selected five complaints per city to evaluate how the cities resolved the complaints buildings, evaluate San Rafael's and to determine if the cities resolved the complaints objectively, and the selected citles'(Novato and Pasadena) process for resolving Reviewed the cities' policies and procedures relevant to resolving report complaints. such complaints and assess Reviewed and evaluated the reports and any documents attached to the reports within the whether their resolutions were cities'data bases. based on an objective evaluation Interviewed relevant city staff. of facts. 6 Review and assess any other issues Obtained and reviewed the cities' policies for code enforcement relevant to the resale record that are significant to the audit. program to determine the steps the cities take in response to violations the city identifies in reports that require property owners to take further action to resolve. Evaluated compliance with the cities'code enforcement policies and procedures for 12 to 15 reports from each city by reviewing the cities'database records for evidence of staff follow-up. Our review focused on the reports that identified violations that required the property owners to take further actions to resolve. Reviewed reports we selected from Objective 4a that had violations that required permits or reinspection, and also judgmentally selected additional reports, including some dated before 2014. Evaluated whether the cities were following their code enforcement policies for the selected reports. Interviewed relevant city staff. Sources: The California State Auditor's analysis of Joint Legislative Audit Committee audit request 2015-134 and information and documentation identified in the table column titled Method. Assessment of Data Reliability In performing this audit, we relied upon reports generated from the information systems listed in Table 3 on the following page. The U.S. Government Accountability Office, whose standards we are statutorily required to follow, requires us to assess the sufficiency and appropriateness of computer -processed information that is used to support our findings, conclusions, or recommendations. Table 3 shows the results of this analysis. 14 California State Auditor Report 2015-134 March 2016 Table 3 Methods Used to Assess Data Reliability INFORMATION SYSTEM PURPOSE San Rafael's CRW Trakit To make a judgmental selection of (Trakit) database— resale record reports. Resale record report data for residential building record (resale record) reports data for the period January 2003 through September 2015 Novato'sTrakit database— Resale record report data for Undetermined the period March 2003 through reliability for the September 2015 purposes of this Pasadena's Tidemark database— audit, Although this Resale record report data for determination may the period July 2000 through affect the precision October 2015 of the numbers we San Rafael'sTrakit database 7o determine the date the city selected information systems controls that received a request for a resale include general and application controls, but record inspection and the date the we determined that this level of review was resale record inspection occurred. To determine when the city created a code enforcement case for resale record inspections with unresolved violations. Novato's Trakit database To determine the date the city issued the resale record reports. To determine whether the city tracked correspondence in resale record case files. Pasadena's Tidemark database To determine the date the city received a request for a resale record inspection. To determine whether the city conducted a reinspection for resale record reports with unresolved violations. METHODS AND RESULTS CONCLUSION This purpose did not require a data reliability We were unable to assessment. Instead, we needed to gain determine whether assurance that the population of resale record the universe from inspections from which we made our selection which we made was complete. our selection We performed data -set verification procedures was complete. and electronic testing of key data elements and found no material errors. We were unable to verify completeness because these systems were primarily paperless and no other source ofthis information exists. Alternatively, we could have reviewed the adequacy of selected information systems controls that include general and application controls, but we determined that this level of review was cost prohibitive. We performed data -set verification procedures Undetermined and electronic testing of key data elements and reliability for the found no material errors. purposes of this We were unable to conduct accuracy and audit, Although this completeness testing because these systems determination may are primarily paperless and no other source affect the precision of this information exists. Alternatively, of the numbers we we could have reviewed the adequacy of present, there is selected information systems controls that sufficient evidence include general and application controls, but in total to support we determined that this level of review was our audit findings, cost prohibitive. conclusions, and recommendations. Sources; California State Auditor's analysis of documents, interviews, and data obtained from the entities listed above. California State Auditor Report 2015-134 1 15 March 2016 Audit Results -rhe 'rhree Cities Are Not Fully Complying With "their Respective Ordinances and Policies for the Residential Building Record Programs The three cities we reviewed—San Rafael, Novato, and Pasadena— do not fully comply with all requirements in their ordinances and policies and procedures pertaining to their residential building record (resale record) programs. For example, none of these cities are monitoring whether individuals who own properties are receiving inspections and obtaining resale record reports (reports) before transferring properties to new owners. In addition, San Rafael and Novato require that the buyer provide written acknowledgement indicating receipt of the report and provide it to the seller, but neither city actively monitors the collection of these documents. Moreover, the cities are lacking key documents for some properties we reviewed that would demonstrate they are complying with their programs' ordinances and policies and procedures. The Cities Are Not Ensuring That Property Owners Are Complying With Applicable Ordinance Requirements Each city we reviewed requires property owners to obtain documents from the city before the transfer of a property; these documents demonstrate the extent to which the city has identified restrictions on use and existing health and safety violations. The ordinances for Novato and San Rafael require that a property owner obtain an inspection of the property by the city and that the city issue a report. Pasadena's ordinance requires that a property owner obtain a city inspection of the property and that the city issue a Certificate of Inspection (inspection certificate) before the property's change in occupancy. If Pasadena identifies violations during the inspection, it issues a report to the owner identifying the required corrections. Unlike San Rafael and Novato, Pasadena does not require that the buyer receive a copy of the report; however, it does require property owners to resolve any deficiencies identified during an inspection before the sale or exchange of the property. The inspection certificate provides additional information that the property complies with health and safety codes, the California Building Standards Code (code), and other city ordinances. None of the cities we reviewed have procedures in place or monitor the identification of properties that are sold or exchanged. According to the cities, their priority is conducting inspections and identifying violations, and the owners are responsible for requesting the resale record inspection, Novato's supervising code enforcement officer (code officer), who manages the resale record program, 16 California State Auditor Report 2015-134 March 2016 We believe the cities could obtain information from theircounty assessors on properties that are sold or transferred, which would assist in monitoring the effectiveness of their programs and increase compliance. stated that limitations in staff levels do not allow Novato to monitor which properties are being sold. According to San Rafael's community development director, local realtors are familiar with the resale record program and he was unaware of any property being sold or transferred without a resale record report. Similarly, according to its building official, Pasadena relies on realtors and escrow companies to assist property owners in complying with the resale record program because the escrow companies must ensure that owners obtain inspection certificates before the sale. Because each city requires that property owners obtain certain documents before a sale or exchange of their property, we believe the cities should monitor compliance with their local laws and work with applicable stakeholders, such as realtors, to obtain greater compliance. Although the cities have relied on property owners to comply with these ordinances, we believe the cities could also obtain and review information from their county assessors to be aware of properties that are sold or transferred. Pasadena's building official stated that the city receives updates to its databases from the assessor several times a year of properties that have transferred, but it has not used the information to ensure compliance with its local ordinance requiring resale record inspections. Obtaining and reviewing this information will assist the cities to independently monitor the effectiveness of their programs and increase compliance. In addition, we noted that Pasadena's database was missing several inspection certificates. According to the city's ordinance, the property cannot be sold, exchanged, leased, or rented until the city issues an inspection certificate. Without an inspection certificate, the city lacks assurance that the property is in compliance with the city's ordinances related to the health and safety of its residents, Specifically, the city's database was missing to of the 17 inspection certificates for inspections we reviewed that had application dates from July 2014 through October 2oiS. In response to our questions regarding the missing documents, the city was subsequently able to provide the inspection certificates, although four of the >_o documents were unsigned. According to the inspection certificate form, the inspection certificate is not official without a signature by a city representative. When we questioned the city about these four certificates, the city's building official surmised that the unsigned certificates resulted from inspector error. Furthermore, San Rafael and Novato were unable to demonstrate in certain instances that buyers were aware of health and safety violations that existed at their new properties, as their respective ordinances require. These cities' ordinances require the seller to deliver a copy of the resale record report to the potential buyer before the sale or exchange of the property. Both cities also require California State Auditor Report 2015-134 March 2016 that the buyer sign a homeowner's card indicating receipt of the report and then provide it to the seller, who submits the receipt to the city. However, neither city actively monitors the receipt of these cards. Out of the 20 properties we tested for each city, we noted 13 instances in San Rafael and io instances in Novato where the city did not receive the card before the property owner transferred the property or it did not receive the card at all. As a result, these cities do not have direct acknowledgement from the buyers that they received the reports and are aware of any existing violations that they are now responsible for addressing. According to its chief building official, San Rafael decided not to pursue tracking or collecting outstanding homeowner's cards because of insufficient staff resources. Novato's code officer, on the other hand, stated that the city had a program in the past to track the receipt of these cards, but it discontinued the program because a low number of cards were being returned, Nevertheless, unless the cities pursue collecting homeowner's cards, they cannot demonstrate that buyers are aware of health and safety issues that may exist on their properties and of their responsibility to correct them. Novato and Pasadena Were Unable to Demonstrate Compliance With Their Additional Policy Requirements in a Few Instances The procedures manual for Novato's resale record program requires the city to issue an additional document along with the resale record report: a Letter of Violations (violation letter) to owners of properties with violations requiring permits. However, we noted a few instances in which Novato could not provide evidence that it was complying with this requirement. The violation letter gives the owner information about the nature of the violations that require a permit to be resolved and it establishes a time frame for obtaining that permit. Of the 20 resale record reports we selected, three of the ii that required the property owner to complete additional actions to resolve unpermitted work had no record of a violation letter. According to the Novato code officer, for one of these three properties, the inspector identified a water heater that had been replaced without a permit as the only violation, and for another of them, the inspector identified a permit that expired without final approval as the only permit violation. In both situations, the code officer stated that Novato's practice is to not issue a violation letter. However, the city's written procedures state that the city should issue a violation letter for any permit violations and it does not specify any exceptions to the policy, so Novato should have issued letters for these violations. For the third property, an apartment, the report indicated no violations, but the case file referenced a Unless the cities pursue collecting homeowner's cards, they cannot demonstrate that buyers are aware of health and safety issues that may exist on their properties and of their responsibility to correct them. 17 18 California State Auditor Report 2015-134 March 2016 separate inspection conducted for the same property as part of the city's multifamily inspection program that had unresolved permit violations at the time.3 As noted in the Introduction, Novato performs resale record inspections of multifamily dwellings as part of its resale record program, which is why we expected that the resale record report would have identified the permit violation, resulting in the city issuing a letter. According to the code officer, staff gave a copy of the resale record report to the owner along with a copy of the multifamily inspection report, which included a violation letter; however, the case file for this property does not refer to either document. The absence of a violation letter raises questions about whether property owners have been properly notified about timelines to resolve violations, which can hinder Novato's attempts at following up on the resolution of permit violations. Pasadena did not fully comply In one instance, Pasadena also did not fully comply with one of its, with one of its additional policy additional requirements, which is to ensure that property owners requirements, which is to ensure correct all violations before it issues an inspection certificate. thatproperty owners correct Pasadena's procedures state that the city can accept a resale record all violations before it issues an report that the owner has signed as proof that the owner resolved inspection certificate. any violations the city identified as minor, which are violations that generally do not require reinspection. If the property has only minor violations and the property owner returns a signed report, the city then issues the inspection certificate. We noted that one of the eight properties we reviewed with minor violations was missing a signed report.The city's records show that it did issue an inspection certificate for this property although the city cannot demonstrate that the property owner resolved the minor violations, which included missing smoke detectors and carbon monoxide detectors, before issuance of the inspection certificate. The building official speculated that an inspector in the city's building inspection division may have verified the correction of the violations as part of a permit inspection, but he was not able to substantiate whether this occurred. Because the status of the minor violations is not documented, the city does not know if the property owner addressed all of those health and safety issues. San Rafael and Pasadena Do Not Consistently Follow Their Policies for Taking Photographs of Property During Resale Record Inspections In addition to the resale record report itself, each city has specified the types of photographs that the inspectors should take during inspections. The photographs help the inspectors document the 3 The multifamily inspection program is a separate program that ensures that apartments and hotels are in compliance with all applicable city ordinances or other laws to enable the city to uphold public health, safety, and welfare. The city's policy is to conduct inspections of multifamily dwellings annually. California State.Auditor Report 2015-134 19 March 2016 condition of the property at the time of the inspection. Table 4 identifies the cities' expectations and policies for inspectors taking photographs, Our review determined that Novato's inspector follows the city's policy for taking photos of the entire property, but that inspectors for San Rafael and Pasadena often do not. Table 4 Summary of the Photograph Policies for the Cities'Residential Building Record Programs SAN RAFAEL NOVATO PASADENA Type of policy and year started Informal, verbal policy since 2014 Written administrative policy since 2012 Written administrative policy since 2006 Policy details Inspectors take photos of violations Inspectors take photos of entire only, with the approval of the property—particularly kitchen, hath(s), property owner, accessory structures, retaining and landscape walls, fence height, patio cover(s), deck(s), and other fixtures. Sources: San Rafael's staff and Novato's and Pasadena's residential building record inspection policies. Although San Rafael does not have a written policy pertaining to photographing properties, it has had an informal policy since 2014 directing inspectors to take pictures of violations. We noted that only two of the io properties with violations we reviewed had photographs in their case file. According to the community development director, one reason for this omission is that some property owners have privacy concerns about allowing photographs of the interior of their homes. However, the case files that were missing photographs did not contain any notations that indicated that the inspector experienced resistance from the property owner. Formalizing the policy and documenting when property owners prevent inspectors from taking photos would aid the city in having thorough documentation of the inspections. Pasadena also did not fully follow its administrative policies to take photographs of properties during resale record inspections. Specifically, Pasadena did not comply with its photo policy for five of ii single-family dwelling properties we reviewed. One of these properties had no photos in the case file. The building official stated that the inspector made a mistake in not attaching the photos to the case. The other four properties included some photos in the files, but the inspectors did not take photos of every angle of the properties as the Pasadena photo policy requires. For two of these properties, the inspectors cannot recall why they did not take photos of every angle. For the other two properties, the assigned inspector believed that the location or the size of some homes may have contributed to his inability to take adequate pictures in compliance with the city's administrative policy. If staff followed the policy, the city would be better able to supplement the resale record report's identification of violations existing at properties, Inspectors take photos of the front, each side, and the rear of the dwelling, as well as all accessory structures. 20 California State Auditor Report 2015-134 March 2016 Documenting a property's Documenting a property's condition through photographs is condition through photographs one method that a city can use to strengthen its position when is one method that city can use responding to complaints by property owners or enforcing the to strengthen its position when correction of violations. The following sections address our responding to complaints by review of those processes and the extent to which the cities have property owners or enforcing the formalized their efforts. correction of violations. The Cities Do Not Have Formal Processes to Address Complaints in a Consistent Manner Because San Rafael, Novato, and Pasadena do not track the complaints they receive or the resolution of those complaints, we requested that the cities and local realtor associations provide us with specific property addresses that they were aware had resale record report complaints. In our review of five complaints for each city, we found that the cities lacked documentation to readily support their decisions, which limits their ability to substantiate complaints. However, we determined that all but one were resolved appropriately by compiling information from various sources and locations within the cities' records to substantiate the complaints and the explanations for the resolutions. The cities also do not have written policies to ensure the quality of resale record inspections or reports. The Cities Do Not Track the Status of Complaints or Their Resolutions Officials from all three cities stated that they routinely receive inquiries related to resale record reports, which they do not consider to be complaints. For the purpose of our review, we defined a complaint as a statement of dissatisfaction with an action or request the city made of an owner pertaining to the program. A property owner who receives a resale record report may decide to submit a complaint to the city contesting the appropriateness of violations noted on the report. However, none of the three cities have a formal process for tracking complaints received or how they are resolved. We expected the cities to have a process in place to identify the types of complaints they receive and to track the timeliness and nature of the resolutions. Tracking complaint information would help the cities identify aspects of their resale record programs that could be improved or better communicated to property owners. The San Rafael and Novato community development directors stated that they do not have formal processes because they receive few complaints. Pasadena's former director of the planning and community development department (former community development director) also said the city did not have a formal complaint process during his tenure and did not California State Auditor Report 2015-134 March 2016 receive many complaints 4 Nevertheless, the lack of a formal process precludes the cities from readily identifying the number and types of complaints they receive and also limits their ability to readily demonstrate fairness and appropriateness in complaint resolutions. Further, this information can be beneficial for improving their respective resale record programs. The Cities Generally Appear Justified in Their Approach forAddressing Complaints, but They Are Not Consistent in How They Make and Document Decisions Because the cities lack formal processes for tracking resale record report complaints, we asked them and their local realtor associations for specific property addresses that had complaints. In many of these complaints, the owners had raised concerns about the validity of the violations noted on the resale record reports and the cities' request for permits or additional documentation to address the violations. Examples included a homeowner complaining about the city requiring expensive architectural drawings to accompany a permit for a deck that had been.on the property for years and another owner complaining about the appropriateness of the city requiring a permit for a garage converted into a family room. We reviewed five complaints pertaining to each city from these lists and attempted to substantiate whether the city had sufficiently researched the nature of the complaint and communicated with the property owner regarding any needed follow-up activity. In reviewing the cities' databases for complaint information, we found that these records did not contain summaries of the complaints and resolutions for 12 of the is complaints. According to officials at each of the cities, staff are expected to document the complaints and decisions in their respective property databases although none of the cities have written policies outlining this process. Further, none of the three cities use a designated location Without uniform approach within their databases to document information related to for documenting complaints as complaints and their resolutions. Without a uniform approach well as the cities'ro tion ales and for documenting complaints as well as the cities' rationales and subsequent resolutions, it can be subsequent resolutions, it can be difficult for the cities to be difficult for the cities to be sure they sure they have thoroughly addressed the complaints property have thoroughly addressed the owners raise. complaints property owners raise. 4 During the time of our audit fieldwork, we obtained information and perspective from the director of Pasadena's planning and community development department, who subsequently left the city in January 2ol6. 21 22 California State Auditor Report 2015-134 March 2016 Consequently, we had to compile information from various sources and locations within the cities' records to substantiate the complaints and the explanations for the resolutions. Despite limitations in the organization of the cities' records, we were able to determine that the cities appeared to have addressed each of the is complaints, For example, we reviewed an instance in which a property owner complained about Pasadena requiring him to obtain a permit for his basement conversion. We were able to verify the appropriateness of the city's determination regarding the conversion because the inspector included a photograph in the property record showing the basement as being habitable space, as depicted in Figure 2. We also reviewed the permit history for that property and determined that no permits had been issued to date pertaining to the basement, and we were able to review the inspection certificate, which stated that the basement was to be used only for storage. Figure 2 Residential Building Record Report Photograph of a Basement'fhat Was Converted Into a Family Room Without a Permit Source: City of Pasadena. In all but one case, resolution of the complaint involved the city justifying its initial determination of the violation and requesting that the owner address the violation by obtaining a permit or . modifying the property. However, we noted one instance in Novato in which the city incorrectly indicated a violation pertaining to California State Auditor Report 2015-134 23 March 2016 an unpermitted bath remodel. The city informed the owner that a permit had not been filed, but the property owner provided the inspector with a copy of the permit the city had previously issued. In addition, none of the cities have a written policy as to how staff should evaluate complaints, although San Rafael has written policies and practices describing how it will address certain situations that might escalate into formal complaints if not resolved. San Rafael established these policies and practices in June 2014 in consultation with its local realtor association to improve the administration and process of its resale record program, For example, the city will not require permits for certain kitchen or bathroom remodels if the unpermitted improvement was installed or constructed more than 25 years earlier and the city determines that the work was properly constructed. This type of document is useful for setting the expectations for how the city will identify violations. According to its community development director, Novato did not adopt such policies and practices in conjunction with its local realtor association because the association never requested it. However, he said that Novato will consider this when it begins updating its policies in March 2o16. Finally, according to its building official, Pasadena always requires permits for work that is not exempt from permitting requirements in order to discourage unpermitted work. However, Pasadena staff met with its local realtor association in the past year and is continuing to have discussions with the association about developing a policy similar to that of San Rafael. The Cities Have Difficulties Locating Permit Records to Address Some Complaints Complaints related to unpermitted work violations can be exacerbated by the cities' difficulties in locating permit records, Permit records are important documents because they confirm the city's approval of modifications, If the cities identify property modifications that do not appear to have permits on file, they will require the owners to obtain them or provide proof that permits were previously obtained. Many of the complaints we reviewed pertained to the cities' requiring permits for work that the property owners claimed either had existed before they assumed ownership or had already been permitted. As previously stated, in one of the Novato complaints we reviewed, the property owner provided a copy of the permit to the city after the inspector could not locate the original. The permit allowed the city to finalize the resale record report. A Pasadena realtor stated that his client waited for weeks after an inspection for the inspector to search for the permit that was ultimately never found. All three cities acknowledged challenges with the completeness or accessibility of older permit records that were maintained in hard copy or on microfiche. Many of the complaints we reviewed pertained to the cities' requiring permits for work that the property owners claimed either had existed before they assumed ownership or had already been permitted. 24 California State Auditor Report 2015-134 March 2016 For example, a fire had destroyed some of Pasadena's historical records. Also, San Rafael states on its website that supplemental documentation from realtors or property owners may support the dismissal of violations or augment the city's permit records. These missing permit records undermine the cities' ability to ensure the thorough and accurate administration of their resale record programs. The Cities Have Not Consistently Ensured the Correction of Violations, Resulting in Backlogs and Lingering Health and Safety Risks Although San Rafael, Novato, and Pasadena have policies and procedures for following up on inspections that identify violations requiring action from property owners, none of the cities consistently follow those policies and procedures. According to the documents it issues to owners after a resale record inspection uncovers violations, Novato generally gives the owner 3o days from the date of the report to resolve any violations that require permits or reinspection before it issues a reminder letter (notice letter). Pasadena also gives the owner 30 days from the date of the inspection to resolve any violations, but its policies state that the city shall issue an administrative citation to owners who do not correct the identified violations within the required deadlines. In contrast, San Rafael expects staff to immediately establish a code enforcement case in its database and issue a notice letter for properties with violations that require plans, permits, inspection, and approval. In circumstances where permit violations do not require a plan, such as a permit for a water heater replacement, the city allows the property owner General Content of the Letters Informing i5 days after the resale record inspection to resolve Property Owners of Violations That the violations before it issues a notice letter. The Require Permits or Reinspection text box presents the general content of each city's notice letter. San Rafael and Novato Warns the property owner of additional fees or penalties that the city may charge the property owner if the violations are not resolved by the deadline established in the notice letter. Pasadena Warns that violations must be resolved. If the violations do not require the city to inspect the correction, the property owner must acknowledge that the corrective work is done by signing the residential building record report and returning it to the city, Sources: Cities of San Rafael, Novato, and Pasadena Novato and Pasadena have been able to generate summary database reports to identify recent resale record inspections with unresolved violations requiring owners to take action, although we question the accuracy of Pasadena's summary report and its usefulness in the city's enforcement efforts. Both cities generated summary reports that identified numerous backlogged cases—over 300 in Novato and nearly 4,600 in Pasadena—over the past nine years and i5 years, respectively, that still appear to have outstanding violations from a resale record inspection. However, we identified some cases in Pasadena's summary report in which property owners appear to have resolved their violations. In these cases, staff did not update the status of the case after issuing an inspection certificate, so the summary report still showed them as unresolved. As a result, the actual number of resale record cases with outstanding violations is likely less than the number reported. Until late December 2oi5 San Rafael, was unable to generate a summary report to identify.properties with outstanding violations. Unlike the other two cities, San Rafael did not use identifiers for the status of inspections of its resale record cases, so its database cannot indicate all properties with outstanding violations. Instead, the city has relied on its resale record inspector to provide a hard copy of the resale record report to a code enforcement officer who then creates a code enforcement case for the property in the database. However, without reviewing each individual resale record report, San Rafael cannot easily identify properties with violations requiring permits or reinspection from resale record reports predating September 2o15, when the city assigned a temporary employee to actively monitor the correction of violations. Although the city does not know how many properties have unresolved violations, its chief building official's best estimate was that the backlog of properties that had resale record inspections in 2oi5 with unresolved permit violations was about iso cases as of November 2oi5. The three cities cited staff workload as the primary cause of their backlogs, although they have taken some action over the past two years to temporarily bolster their efforts at directing property owners to correct violations. Both San Rafael and Novato have enlisted temporary staff to assist in addressing enforcement backlogs and Pasadena has reassigned a contractor in its efforts. As mentioned previously, San Rafael assigned a temporary employee to monitor compliance using the enforcement process for resale record reports. According to its chief building official, the temporary employee finished the code enforcement process for the backlog of cases from calendar year 2oi5 in early February 2o16 and has begun to follow up on prior resale record inspections that require permits. Novato's code officer stated that the city reassigned two employees from other departments on a part-time basis to assist with enforcement for cases that originated from 2oo8 to 2oi2. He plans to use a reassigned city employee again in April 2o16 to continue the enforcement on these older cases. According to Pasadena's city officials, the city reassigned a contractor in December 2o15 to assist in reducing the city's backlog in enforcement for resale record inspections. For each city, we reviewed a selection of resale record reports with unresolved violations to assess the cities' compliance with their policies: iS each in Novato and San Rafael and 12 in Pasadena. As California State Auditor Report 2015-134 March 2016 The three cities cited staff workload as the primary cause of their backlogs, although they have taken some action to temporarily bolster their efforts at directing property owners to correct violations. 25 26 California State Auditor Report 2015-134 March 2016 described in Table 2 on page 12, our methodology for selecting reports to review the cities' recent enforcement actions primarily relied on the resale record reports we reviewed as part of our audit objective addressing compliance, Specifically, we initially selected any reports with violations requiring permits or reinspection from the pool of reports we used for determining whether the cities complied with their policies and procedures from July 2014 to October 2oiS. Because our selection of the resale record reports in Pasadena had fewer properties with permit violations during this time period, we reviewed fewer violations for this city. We then selected some additional reports requiring permits or reinspection for each city, including a few older cases. Five of the older reports among the cities had violations unresolved longer than five years, including one Pasadena property with violations unresolved since Zoog.. Pasadena has also not initiated its enforcement process for most of the properties we reviewed for which activity should have occurred. Only one property had all of its violations resolved within the appropriate timeline, and three other properties had not yet reached a point where the city needed to begin its enforcement. Although Pasadena's policies state that the city shall issue administrative citations for properties with violations that are not resolved within the required deadlines, the city did not issue citations for the remainder of the properties we reviewed. According to the building official, Pasadena's practice is to issue a notice letter before it issues administrative citations. However, of eight properties with outstanding violations, the city issued only one notice letter and the remaining properties still had unresolved violations as of November lois, including one property from 2004 and another from 2oo7. We found that neither San Rafael nor Novato has initiated the enforcement process for a majority of the properties we reviewed, despite city policies requiring them to do so. Only two properties in San Rafael and four properties in Novato had their violations resolved before the cities needed to begin their enforcement process. San Rafael created code enforcement cases in its database for only three properties out of 13 with unresolved violations and issued only one notice letter as of November 2015, Of those 13 properties, eight still had unresolved violations at that time, including one property inspected in 20og and another in 2012. Out of ii properties with unresolved However, subsequent to our review, the community development violations, Novato issued only director stated that the city has initiated the enforcement process two notice letters. Seven of those on most of the properties with unresolved violations that we tested. ii properties—including three For Novato, out of ii properties with unresolved violations, the properties from Zoog, 2010, city issued only two notice letters. Seven of those ii properties— and2ol2—stillhod unresolved including three properties from 2oo8, 20io, and 2o12—still had violations in November2ot5. unresolved violations in November lois. Pasadena has also not initiated its enforcement process for most of the properties we reviewed for which activity should have occurred. Only one property had all of its violations resolved within the appropriate timeline, and three other properties had not yet reached a point where the city needed to begin its enforcement. Although Pasadena's policies state that the city shall issue administrative citations for properties with violations that are not resolved within the required deadlines, the city did not issue citations for the remainder of the properties we reviewed. According to the building official, Pasadena's practice is to issue a notice letter before it issues administrative citations. However, of eight properties with outstanding violations, the city issued only one notice letter and the remaining properties still had unresolved violations as of November lois, including one property from 2004 and another from 2oo7. California State Auditor Report 2015-134 I 27 March 2016 Furthermore, Pasadena is not always ensuring that property owners are resolving all violations before issuing an inspection certificate. Specifically, the city issued inspection certificates to two of the 12 properties we reviewed despite the absence of evidence demonstrating that the owners obtained the necessary permits or requested reinspection. This is contrary to its ordinance, which states that Pasadena will not authorize a property to be occupied if major violations remain unresolved. According to the building official, city staff resolved the violations but did not document the resolution within the case file. Officials at each city stated that violations may remain unresolved for extended periods because their goal is to bring properties into compliance with current law and they are willing to delay the enforcement process as long as the property owner is demonstrating a good -faith effort in remedying the violations. The cities are able to determine if property owners are making a good -faith effort by contacting them to learn of their progress and by reviewing the properties' permit application history. Nevertheless, each city has a process to take legal action if violations are not corrected in the time frames established in its policies. When we asked the cities if they escalated their enforcement of the cases, San Rafael's community development director and Pasadena's building official stated that they were not aware of any instances related to resale record reports in which they had elevated the enforcement in the past two years, while Novato's code officer stated that the city sent one resale record case to a hearing in the past two years. Furthermore, we found no evidence in each city's resale record files within its database to indicate the degree to which property owners were making progress in correcting the violations, aside from some notations in San Rafael's and Novato's resale record files that referenced conversations the two cities had with the property owners. These notations did not describe the property owners' actions and progress in correcting violations, such as applying for a permit. Without the cities documenting such information in the resale record files, it is unclear if they have been determining whether the property owners were making good -faith efforts to correct the violations. By not thoroughly following up on properties with unresolved violations, the cities cannot demonstrate having taken appropriate actions to protect residents from health and safety issues identified during resale record inspections. We also found that in each city, it is common for the same property to have repeated violations over several years. Examples of repeated violations include water heaters missing required strapping and unpermitted renovations. For the 20 properties we reviewed for each city, we found repeated violations in reports 28 California State Auditor Report 2015-134 March 2016 for nine properties in San Rafael, 1-3 properties in Novato, and i5 properties in Pasadena. Many of these were violations for which the cities do not require permits or reinspection to verify that the property owners made corrections. Table 5 identifies some examples of these types of violations and the risks associated with not correcting them. Novato's resale record inspector reviews previous reports before conducting an inspection and preparing a new report. This research informs the inspector of prior violations and whether structural changes have occurred that require permits since the city conducted the prior inspection. According to its building official, Pasadena's resale record inspectors only review past reports for which the city has not issued an inspection certificate or received a signed report. San Rafael's chief building official stated that its resale record inspector does not review previous reports, but the city will be looking into adding this step to its process. By not reviewing all previous reports, the inspectors may not know if the violations they find have been identified previously. Table 5 Examples of Common Repeat Violations Identified in Residential Building Record Reports at San Rafael, Novato, and Pasadena COMMON REPEAT VIOLATIONS No solid self-closing door between garage and dwelling Pool fence or gate not installed HEALTH AND SAFETY RISKS ASSOCIATED WITH UNRESOLVED VIOLATIONS Fires may spread and fumes, including carbon monoxide, may enter the dwelling. Unattended children may gain access to pool and drown. Water heater does not have strapping During earthquakes, water heaters without strapping may move or tip over, which could result in a fire hazard due to gas line leaks or flooding from broken water lines. Sources: Residential building record reports from the cities of San Rafael, Novato, and Pasadena; and various websites containing health and safety information. Note: San Rafael and Novato do not require permits for the above violations. According to Pasadena's building official, Pasadena requires permits in some cases for the above violations. San Rafael's chief building official and Novato's code officer cited insufficient staffing for why their cities do not enforce repeated violations. Pasadena's officials informed us that they rely on the property owner's signature on the report as the indication that these violations were resolved and consider recurrences of these violations as new violations by subsequent owners. However, as indicated previously, we found violations at 1S of 20 properties we tested at Pasadena that continued to exist. Additionally, if the cities believe that repeated violations are important enough to identify as needing correction, they should ensure that those violations are corrected. California State Auditor Report 2015-134 29 March 2016 Two Cities Did Not Always Meet Their Time Goals, and the Other City Did Not Fully Establish Goals Establishing time goals for conducting resale record inspections and completing reports allows the cities to measure their responsiveness to property owners' requests, thereby aiding owners in their efforts to sell or transfer their properties promptly. As shown in Table 6, the three cities have established time goals for completing resale record reports. San Rafael's and Pasadena's goals are measured from the date an individual submits an application for the resale record report to the date the property inspection occurs (application to inspection), and then from the inspection date to when the report is issued (inspection to report issuance). San Rafael's goal from application to inspection is 12 business days, composed of seven business days from when the application is received to when the inspection is scheduled, and five business days from that point until the inspection. It also has a goal of two business days from inspection to report issuance, for an overall goal of 14 business days. Pasadena measures its time goals using calendar days rather than business days, and it has a goal of seven calendar days from application to inspection. In addition, according to its former community development director, Pasadena has had an informal time goal of one calendar day from inspection to report issuance. In contrast, Novato established a time goal of io business days from inspection to report issuance, but it does not have a time goal from application to inspection. Table 6 Summary of the Cities'Processing Times for a Selection of Residential Building Record Reports From July 2014 Through October 2015 SAN RAFAEL NOVATO PASADENA APPLICATION TO INSPECTION TO APPLICATION TO INSPECTION TO APPLICATION TO INSPECTION TO INSPECTION REPORT ISSUANCE INSPECTION REPORT ISSUANCE INSPECTION REPORT ISSUANCE City's time goal 12 business days 2 business days No goal 10 business days 7 calendar days 1 calendar d 7 Average number of days to 5.4 1.1 5.6 5.6 9.6 Unable to process a report for the determine* 20 properties we reviewed Numberof instances (out of 20) 0 4 No goal 0 8 Unable to , that the city did not meet its determine" time goal Sources: California State Auditor's analysis of residential building record reports (report); the cities'ordinances, policies, and procedures; and interviews with the cities'staff. " We could not determine when staff issued the report because Pasadena's database does not contain this information and the reports do not identify the issuance date. As summarized in Table 6, we reviewed 20 resale record reports from each city that had applications submitted between July 2014 and October 2015, We found that Novato met its time 30 California State Auditor Report 2015-134 March 2016 One possible factor for the cities not meeting their time goals is the seasonal nature of the housing market, which can vary among the cities. According to city officials who supervise the resale record program, completing resale record inspections and reports in a timely manner can be challenging during the peak periods of housing sales because a high volume of inspection requests occurs during that time. In addition, San Rafael's chief building official cited insufficient staffing as a reason the city would be unable to meet its time goal from inspection to report issuance for some properties. However, in our review of resale record reports for each city, we found instances throughout'different times of the year in which resale record inspections and reports took longer to complete. Another factor in Pasadena not meeting its time goal from application to inspection is its practice of allowing property owners to schedule resale record inspections for a specific date instead of the next available date. Pasadena's building official informed us that the city does not have the ability to separately track instances in which a property owner chooses a resale record inspection date. In those situations, the city has no control over whether it can achieve its stated time goal. Nevertheless, if Pasadena developed a process to separately identify those applicants who request specific resale record inspection dates, it could subsequently focus on scheduling the other inspections over which it does have control. Pasadena also does not track the date of the resale record reports it issues. Although its database can document the report issuance date, inspectors are not recording this information upon issuing the reports. Further, the city does not identify the issuance date on the report itself, thereby precluding it from being able to monitor the timeliness of preparing its reports. Pasadena's building official was unclear about why the city does not track the report issuance date. goal of >_o business days from inspection to report issuance for all 20 properties, although we discuss our concerns about the reasonableness of this goal later in this section. However, San Rafael and Pasadena did not meet their time goals in some instances. Specifically, San Rafael took one or two additional business days to meet its inspection to report issuance goal in four instances. Nevertheless, the city was still able to issue resale record reports for these properties within 14 business days of their application dates because it had completed the inspections in less time than its Pasadena did not meet its goal stated application to inspection goal. In addition, Pasadena did not of seven calendar days from meet its goal of seven calendar days from application to inspection application to inspection in eight in eight instances, ranging instead between two and 20 additional instances, ranging instead between calendar days beyond its goal. As we discuss later in this section, we two and 20 additional calendar were unable to determine if Pasadena met its inspection to report days beyond its goal. issuance goal. One possible factor for the cities not meeting their time goals is the seasonal nature of the housing market, which can vary among the cities. According to city officials who supervise the resale record program, completing resale record inspections and reports in a timely manner can be challenging during the peak periods of housing sales because a high volume of inspection requests occurs during that time. In addition, San Rafael's chief building official cited insufficient staffing as a reason the city would be unable to meet its time goal from inspection to report issuance for some properties. However, in our review of resale record reports for each city, we found instances throughout'different times of the year in which resale record inspections and reports took longer to complete. Another factor in Pasadena not meeting its time goal from application to inspection is its practice of allowing property owners to schedule resale record inspections for a specific date instead of the next available date. Pasadena's building official informed us that the city does not have the ability to separately track instances in which a property owner chooses a resale record inspection date. In those situations, the city has no control over whether it can achieve its stated time goal. Nevertheless, if Pasadena developed a process to separately identify those applicants who request specific resale record inspection dates, it could subsequently focus on scheduling the other inspections over which it does have control. Pasadena also does not track the date of the resale record reports it issues. Although its database can document the report issuance date, inspectors are not recording this information upon issuing the reports. Further, the city does not identify the issuance date on the report itself, thereby precluding it from being able to monitor the timeliness of preparing its reports. Pasadena's building official was unclear about why the city does not track the report issuance date. California State Auditor Report 2015-134 31 March 2016 However, the city indicated that it is planning to begin doing so in April 2o16. The lack of this information hinders the city's ability to refute claims by property owners regarding excessive delays in issuing resale record reports, which may impact the timing of property sales. In addition, despite establishing time goals, none of the cities have a formal process to monitor whether they meet their time frames. According to San Rafael's chief building official, his department does not track the timelines of its processes because the time required to monitor them is not worth the effort. Further, San Rafael's building official stated that he had not received complaints about the length of time for processing resale record reports. According to Novato's community development director, the city has received complaints regarding the timeliness of its resale record report processing due, in part, to the average escrow period being shortened from 45 days to io days, which has placed more pressure on the timeliness of report completion. Pasadena officials did not provide a reason for not tracking timelines other By not monitoring the time goals than to say that the ordinance does not require such tracking; they have established, these however, the city's time goal is stipulated within its rules and cities have a limited ability to regulations regarding inspections. Additionally, by not monitoring demonstrate accountability and the time goals they have established, these cities have a limited to appropriately inform the public ability to demonstrate accountability and to appropriately inform about the efficiency of their resale the public about the efficiency of their resale record programs. record programs. Unlike the other two cities, Novato has not established a time goal from application to inspection. According to its code officer, the length of time from receiving an application to performing an inspection depends on the availability of the city's primary inspector, who performs the resale record inspections. In addition, according to the city's development permit supervisor, the city will schedule these inspections for a specific date, instead of the next available date, if the property owner so requests. However, the city does not separately track circumstances where it accommodates these requests. As a result, the city cannot distinguish whether a lengthy period from application to inspection was within its control. Although Novato does not track these requests, our review of the 20 selected reports determined that the city averaged five to six business days from receiving an application to conducting an inspection. In four instances, the city took 12 or more business days to perform the inspections. Not having a time goal from application to inspection can make it challenging for Novato to . demonstrate the effectiveness of its scheduling process. Defining a time goal from application to inspection would also establish expectations for customer service. 32 California State Auditor Report 2015-134 March 2016 In comparing the three cities' time goals from inspection to report issuance, Novato's goal of 10 business days is substantially longer than the two business days for San Rafael and one calendar day for Pasadena. Although some differences may exist among the cities in the activities they perform after the resale record inspection and before the report is issued, we determined that the average time each city's staff spends during this period is comparable. Therefore, it would seem reasonable for Novato to issue a report much sooner than 10 business days after an inspection. In fact, the city completed the entire resale record process, from application to report issuance, within 10 business days for half of the 20 properties we reviewed. According to the code officer, Novato has not updated its goal from inspection to report issuance because this period of time allows the city more flexibility in handling resale record inspections during the peak season. Further, the community development director stated that Novato may consider reducing the time frame for report preparation, but the city has not made a determination at this time. Nevertheless, given the number of activities that take place during this time, we believe that the city should significantly reduce the time goal from inspection to report issuance. The Cities Lack Processes to Demonstrate the Appropriateness of Their Fees The fees the cities charge for resale record reports vary by the type of dwelling. Table 7 presents a breakdown of the current. fees for each city as well as the components included in the fees. For example, although Novato charges more than San Rafael for a single-family dwelling, its fee includes the cost of enforcing the correction of violations that staff identify during resale record inspections, Novato's fee structure has remained the same since 20o6, and San Rafael's fees have been the same since 2010. In contrast, Pasadena has adjusted its fees periodically based on the consumer price index since updating its fees in 20o6. Although these fee structures have been in place for several years, San Rafael and Pasadena could not document how the current amounts were calculated and how those fees are commensurate with the costs incurred to operate their resale record programs. The California Constitution and related case law provide that San Rafael and Pasadena told us local regulatory or service fees may be imposed only to cover the they are subsidizing theirresale costs of the regulatory program or services rendered. Therefore, record programs through funding the fees the cities charge should not exceed the reasonable cost from their general funds, but they of providing the services necessary for the resale record activities were unable to quantify the amount and they cannot be levied for unrelated purposes. Despite the lack of their subsidies. of documentation, San Rafael and Pasadena informed us that they California State Auditor Report 2015-134 33 March 2016 are subsidizing their resale record programs through funding from their general funds, but they were unable to quantify the amount of their subsidies. Table 7 Comparison of the 2015 Residential Building Record Program Fees FEETYPE SAN RAFAEL NOVATO PASADENA Most recent update to 2010 2006 2015 fee schedule Single-family dwelling $165 $274 $135 Duplex $330 $273 $270 Condominium $150 $236 $135 (first unit) Condominium $150 $37 $135 (additional unit) Apartment (first unit) $165 $236 Not applicable* Apartment (additional unit) $50 $37 Not applicable* Unimproved lott Not applicable $219 Not applicable Components of the fee Processing applications for Processing applications for Processing applications for (per city officials): residential building record (resale resale record inspections resale record inspections record) inspections Scheduling inspections Scheduling inspections Scheduling inspections Researching permit history Researching permit history Researching permit history Conducting the inspection Conducting the inspection Conducting the inspection Preparing and issuing the report Preparing and issuing the report Preparing and issuing the resale Monitoring and enforcing correction Monitoring and enforcing correction record report (report) of cer in permit violations of certain permit violations Sources: Cities of San Rafael, Novato, and Pasadena. * Pasadena does not conduct resale record inspections on apartment buildings because the ordinance specifies that resale record inspections are to be conducted only on single-family dwellings and duplexes. The city administers a separate program—the quadrennial inspection program—for multifamily dwellings, which results in inspections for apartments every four years regardless of whether the property is being sold. San Rafael and Novato have similar inspection programs for multifamily dwellings in addition to performing a resale record inspection of these properties when they are sold. t Novato is the only city that we reviewed that inspects unimproved lots because its ordinance specifies that the resale record reports are to be obtained for all residential properties, which are defined in the ordinance to include both improved and unimproved real property. In contrast, San Rafael's ordinance specifies that reports must be obtained for residential buildings, which are defined as improved property, and Pasadena's ordinance specifies that a Certificate of Inspection must be obtained any time a unit of property changes occupancy and/or ownership. In contrast, Novato maintains specific financial information on its resale record program independent from other city programs. The city initially acknowledged that it had not analyzed whether its fees are appropriate, but it performed an analysis in January 2o16 at our prompting that concluded that the city had subsidized the resale record program by $3o,2oo in fiscal year 2014-15. According to Novato's finance manager, the fees were established in 2oo6 to cover total costs and the city has not increased its fees to reflect inflation or salary increases for applicable employees. In addition, he questioned the relevance of analyzing the components of the current fees because the city has not adjusted its fees since it 34 California State Auditor Report 2015-134 March 2016 established them to cover total costs. Nevertheless, performing a cost analysis would allow the city to demonstrate whether its fees are appropriate or need to be adjusted. Furthermore, although the three cities asserted that they established According to a management analyst at Pasadena, the city was unable to locate the detailed support for the cost analysis conducted in 2oo6 by a consultant contracted by the city. The consultant concluded that the city was undercharging for resale inspections. In response to our inquiries, Pasadena performed a cost analysis in January 2016 in which it used estimates of time staff spend on both resale record inspection and enforcement activities and applied them to personnel costs. The city concluded that it is undercharging for the program's administration. However, similar to San Rafael, it is unclear whether Pasadena was charging appropriate resale record fees at the time those fees were established. To assess the reasonableness of their current fees, we calculated the basic costs the cities incur to conduct a resale record inspection. We focused on the processing of an individual resale record report for single-family and condominium dwellings, which, according to the cities' staff, are the most common type of fees charged. We interviewed management and the staff responsible for processing resale records to identify appropriate tasks to include in the cost and their estimates of the time required to perform these tasks, We then applied each staff member's hourly rate to the time spent contributing to the report's completion. San Rafael and Novato include the total salary, benefits, and overhead costs of their applicable staff in the calculation of the individuals' hourly rates, their resale record inspection fees based on the results of previous cost studies, only Novato was able to provide detailed support for how these fees were calculated and only after it requested this information from the external consultant who completed the San Rafael's building official was 2oo6 cost study. San Rafael's building official was unable to find unable to find documentation documentation for the analysis he completed for the Zoog cost forthe2009 cost study analysis study that was used to establish the current inspection fees. Instead, used to establish the current he provided a draft of an analysis he prepared in May 2o15 for the inspection fees. purpose of requesting a fee change that shows the city's current cost to conduct an inspection for a single-family dwelling. His analysis involved identifying the time staff spend on resale record inspection activities and using personnel and overhead rates to calculate total costs, That analysis concluded that the city's current fees are significantly below the costs incurred, indicating that the city needs to increase its fees to cover these costs. However, the department has not yet presented the proposed fee change to the city council for approval. Additionally, it is unclear whether the city was charging appropriate fees at the time their current fees were established. According to a management analyst at Pasadena, the city was unable to locate the detailed support for the cost analysis conducted in 2oo6 by a consultant contracted by the city. The consultant concluded that the city was undercharging for resale inspections. In response to our inquiries, Pasadena performed a cost analysis in January 2016 in which it used estimates of time staff spend on both resale record inspection and enforcement activities and applied them to personnel costs. The city concluded that it is undercharging for the program's administration. However, similar to San Rafael, it is unclear whether Pasadena was charging appropriate resale record fees at the time those fees were established. To assess the reasonableness of their current fees, we calculated the basic costs the cities incur to conduct a resale record inspection. We focused on the processing of an individual resale record report for single-family and condominium dwellings, which, according to the cities' staff, are the most common type of fees charged. We interviewed management and the staff responsible for processing resale records to identify appropriate tasks to include in the cost and their estimates of the time required to perform these tasks, We then applied each staff member's hourly rate to the time spent contributing to the report's completion. San Rafael and Novato include the total salary, benefits, and overhead costs of their applicable staff in the calculation of the individuals' hourly rates, California State Auditor Report 2015-134 35 March 2016 whereas Pasadena includes only the total salary and benefits in its calculation. According to a management analyst in the planning and community development department, Pasadena was unable to determine the total amount of overhead costs attributable to the resale record inspections. Based on our analysis, we determined that San Rafael and Novato are likely undercharging property owners of single-family residences and condominiums. Because Pasadena was unable to tell us how much overhead cost should be attributed to its resale record inspections, we could not determine if that city was undercharging property owners. However, subsequent to several discussions— including during our closing conference—regarding its inability to identify its overhead costs, Pasadena provided us with a recent draft cost study in which the contracted consultant concluded that the city is currently undercharging for inspections. The consultant identified overhead costs that it included in its calculation of the resale record inspection costs that the city was initially unable to determine. The city subsequently provided us with supporting documentation for these costs that the consultant extracted from the city's accounting system. We questioned how its consultant was able to identify overhead costs when city staff had been unable to do so. According to a management analyst, the planning and community development department was not aware of how to quantify these additional costs and relied on the consultant's expertise to obtain this information. Proposition 26, enacted at the statewide general election on November 2, 2oio, amended the California Constitution to define tax to mean any levy, charge, or exaction of any kind imposed by a local government, and it places the burden on the local agency to demonstrate, among other things, that a fee, as opposed to a tax, constitutes reasonable regulatory costs for inspections. Proposition 26 applies to fees increased on or after November 2, 2oio, and Pasadena is the only one of the three cities we reviewed that has adjusted its fees since that date. However, San Rafael and Novato will also be subject to the requirements of Proposition 26 if they increase their fees. Although Inspectors Are Qualified, the Cities Do Not Have Standards for Continuing Education and Do Not Maintain Supporting Records The responsibilities of resale record inspection staff vary among the three cities, which accounts for differences in the minimum job qualifications each city has established. Table 8 on the following page summarizes the minimum established qualifications for staff who perform the resale record inspections. San Rafael requires its resale record inspectors to obtain an International Code Council (ICC) We determined that Novato and San Rafael are likely undercharging property owners of single-family residences and condominiums for resale record inspections. 36 California State Auditor Report 2015-134 March 2016 certification within two years of employment. Its human resources director noted that the required qualifications for resale record inspectors are the same as for the city's building inspector classification, which requires ICC certification. She noted that the city hires temporary employees to perform resale record inspections and to fill in for building inspectors as needed, so they are required to meet the minimum qualifications for the building inspector classification. According to the ICC, California and the other 49 states have adopted its international codes at the state level, comprising a complete set of coordinated building safety and fire prevention codes. Although Pasadena does not require the ICC certification for its inspectors, two of the three current resale record inspectors have this certification. On the other hand, Novato does not require any type of certification for its resale record inspectors. Novato's code officer explained that the city does not require certification because the State does not require it. Table 8 Minimum Qualifications for Residential Building Record Inspectors POSITION REQUIREMENTS CITY AND POSITIONTITLE EDUCATION EXPERIENCE CERTEFICATION AND CONTINUING EDUCATION San Rafael: Building Inspector I Novato: Code Enforceme6t Officer Graduation from an Two years of responsible accredited high school experience in a variety of or equivalent. building construction work. Completion of 12th grade with classes in urban planning, business administration, or related field. Pasadena: Code Compliance Officer No minimum requirements. Two years of experience with the public and in the interpretation of rules, laws, or procedures. Some code inspection and enforcement experience is desirable. Two years of experience in zoning, housing or building inspection, or related municipal code inspection work. Within two years of appointment, must obtain International Code Council (ICC) certification as a condition of continued employment.* Continuing education is a requirement of the certification, Individuals must have at feast 1.5 continuing education units every three years, which its equivalent to 15 hours. No minimum requirements Nc requirement for iCC certification, Code compliance officers must complete a peace officer arrest and firearms course (course), and earn a certification, before their probation period ends so that they have the authority to issue citations.t There are no continuing edlucatibn requirements for this position or for the course. Sources: Cities of San Rafael's, Novato's, and Pasadena'sjob class specifications and ICUs Continuing Education Requirements. * Certification from the ICC demonstrates that an individual has knowledge of various construction regulatory codes, standards, and practices. t The city's code compliance officers: need to complete this course and obtain the certification because they ensure compliance with local zoning codes and enforce housing quality and property maintenance ordinances. We determined that most of the resale record inspection staff in these cities during the past five years either met or exceeded the minimum qualifications for their positions. We obtained and California State Auditor Report 2015-134 37 March 2016 reviewed the personnel records for the 16 individuals who have primarily performed resale record inspections for San Rafael, Novato, and Pasadena since 20 o and determined that io of them exceeded the minimum qualifications and two others met the minimum qualifications. In most cases, these inspectors had met or exceeded the years of experience requirement in addition to holding the applicable certification. We were unable to verify the qualifications of one former city employee and three contracted resale record inspectors in San Rafael because the city did not have the applicable supporting records. According to San Rafael's human resources director and the chief building official, the city does not keep certifications in personnel records nor does it maintain personnel records for contracted personnel. Although San Rafael and Pasadena have ICC -certified building inspectors performing resale record inspections, officials at both cities stated that the certification is desirable but not necessary for staff to perform resale record inspections. San Rafael's chief building official stated that these inspections do not require the same level of technical training that building inspections require. As previously stated, the city's resale record inspectors must meet the city's building inspector minimum qualifications by obtaining ICC certification within two years of employment because they fill in for building inspectors as needed. According to Pasadena's interim director of the planning and community development department, his department would benefit from its resale record inspectors obtaining ICC certification, so they would have advanced knowledge of the code requirements, which can be useful during inspections. Regardless of the level of expertise and presence of certifications, officials at the three cities believe their resale record inspectors can proficiently perform their jobs because they receive on-the-job training and participate in external training events. Although all three cities' resale record inspectors have attended continuing education sessions on building standards, the cities have not established continuing education requirements to ensure that their staff remain current on the code requirements. The California Building Standards Commission is the entity that the California Building Standards Law authorizes to administer the many processes related to the State's code requirements, and it initiates updates to those requirements every three years. The frequency of these changes directly impacts the resale record inspectors' responsibilities, which emphasizes the importance of participating in relevant continuing education. We identified several training courses that would be valuable for resale record inspectors, such as a course on housing enforcement, laws, and property maintenance codes administered by the California Association of Code Enforcement Officials and a class on residential inspections, The cities have not established continuing education requirements to ensure that their staff remain current on building standards. 38 California State Auditor Report 2015-134 March 2016 covering compliance with recent state codes, sponsored by the California Building Officials Training Institute, The absence of continuing education standards could result in inconsistent performance by resale record inspectors, Officials at the three cities agreed that it is beneficial to establish a continuing education requirement to ensure that resale record inspectors are current on building standards. Further, the three cities do not keep centralized records of the continuing education their resale record inspectors have attended. In addition, San Rafael does not maintain applicable certification documents pertaining to its inspectors. We expected to find this documentation in either the cities' personnel records or the records of the departments that administer the resale record program. However, when we asked the three cities for documentation of the continuing education staff had attended,. and for certificates in San Rafael, they had to request those records directly from the inspectors. The cities' officials explained that they rely on their staff to maintain continuing education records. San Rafael's chief building official stated that he has not kept continuing education records for his staff because he is aware of these training classes through his approval of training requests; however, he acknowledged that he does not keep comprehensive records of the training requests. According to Novato's code officer, who oversees the resale record program, his department does not maintain training records because individuals are responsible for maintaining their own records and providing them to the department when requested. According to Pasadena's former community development director, maintaining records of certification and continuing education was impractical for that department. However, Pasadena recently filled a position in February 2o16 that will maintain certification and continuing education records, among other duties. Until the cities maintain continuing education records, they may be limited in their ability to defend the quality of their staff and programs. Recommendations To ensure that the cities are aware of the degree of property owners' compliance with the cities' respective resale record ordinances, San Rafael, Novato, and Pasadena should implement procedures that can help them monitor the sale or exchange of properties that require resale record inspections. The cities should work with applicable stakeholders, such as realtors, to aid in these efforts. California State Auditor Report 2015-134 39 March 2016 To verify that new property owners are aware of the health and safety concerns at their properties and any corrections they need to make, San Rafael and Novato should each develop a process to ensure that they receive homeowners' cards. Pasadena should develop a process to ensure that staff sign the inspection certificates and add them to the city's database. To ensure that the cities can monitor the satisfaction individuals have with their resale record programs and that the cities each have a uniform approach for resolving complaints, the three cities should develop a formal process for tracking the complaints they receive. In addition, they should each develop a formal policy that describes how staff should evaluate complaints, and they should document their activities associated with resolving complaints, such as the resolutions and the rationales for those resolutions. They should also establish a designated location in their respective databases to record this information. The cities should develop formal written procedures for staff to follow up on property owners' correction of violations. These procedures should identify the following: • The method in which staff document in the database the violations identified during inspections and their actions to bring the property into compliance. In addition, the procedures should identify where within the database these documents should be kept. • The protocol for ensuring that repeat violations are corrected in a timely manner. To ensure that staff can identify any repeat violations, San Rafael's staff should review prior resale record inspection reports before conducting subsequent resale record inspections. To ensure that property owners correct violations in a timely manner, the three cities should do the following: • Develop a work plan by July 2o16 to identify and address their enforcement backlogs by April 2017, so that each city is up to date with its enforcement actions, such as issuing notice letters and monitoring property owners' actions to resolve violations. San Rafael's and Pasadena's work plans should also include updating the completion status of the violations so unresolved violations can be identified and monitored for subsequent correction. • Follow through with their enforcement policies, such as issuing notice letters. 40 California State Auditor Report 2015-134 March 2016 Establish a written process for staff to monitor and ensure that property owners correct violations, including accurately identifying the properties that have not obtained necessary permits or have not had required reinspections performed. To ensure that the cities conduct their resale record inspections and complete the reports in a timely manner, the following should occur: All three cities should establish a process to monitor their ability to meet their established time goals from application date to report issuance, such as developing a reminder report or using an automated feature of their database. Pasadena should also document the date the report is issued on the resale record report and in its database. • San Rafael and Pasadena should review their time goals by July 2o16 for the resale record program and modify them if necessary, factoring in property owners' expectations and staff resources to complete the resale record reports. Novato should also review its time goals by July 2o16 and establish an expectation that is significantly shorter than io business days for the period from inspection to report issuance and that is commensurate with the effort required to issue the report. Further, it should establish a time goal for the period of application to inspection. If applicable, the three cities should update their policies and procedures to reflect the revised time goals. Novato and Pasadena should each establish a method to identify those inspections that have inspection dates requested by property owners. To ensure that the resale record fees they charge are appropriate, the following should occur: San Rafael should conduct a formal fee study by December 2o16 that incorporates the actual costs associated with the issuance of a resale record report by dwelling type, and Pasadena should finalize its formal fee study by April 2o16. The three cities should establish a time frame to periodically determine whether their fees are commensurate with the cost of administering their resale record programs. The cities should ensure that they retain any documentation used to support their analyses and any subsequent adjustments to fees. California State Auditor Report 2015-134 I 41 March 2016 To ensure that the cities can demonstrate that their resale record inspectors are qualified, the following should occur: All three cities should develop processes to maintain continuing education attendance records. They should each ensure that staff receive periodic continuing education through internal and external sources to keep them current on code requirements, especially when the requirements are updated. San Rafael should ensure that staff who are required to have certifications continue to maintain them in good standing to perform their necessary job functions. If Pasadena subsequently requires its resale record inspectors to have ICC certifications, it should also ensure that those staff maintain them in good standing to perform their necessary job functions. We conducted this audit under the authority vested in the California State Auditor by Section 8543 et seq. of the California Government Code and according to generally accepted government auditing standards, Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives specified in the Scope and Methodology section of the report. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Respectfully submitted, EL"L;� /, )- H'-'Tw� ELAINE M. HOWLS, CPA State Auditor Date: March 24, 2016 Staff: Linus Li, CPA, CMA, Audit Principal Myriam K. Czarniecki, MPA, CIA Jessica Derebenskiy Bridget Peri, MBA Legal Counsel: Richard B. Weisberg, Senior Staff Counsel For questions regarding the contents of this report, please contact Margarita Fernandez, Chief of Public Affairs, at 916,445.0255. 42 California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only, California State Auditor Report 2015-134 j 43 March 2016 -- _; CITY OF MAYOR GARY 0. PHILLIPS VICE MAYOR KATE COUN COUNCILMEMBERMARIBETHBUSHEY Mkdon City - COUNCILMEMBER JOHN GAMBLIN of Mvio COUNCILMEMBER ANDREW CUYUGAN MCCULLOUGH 410 CITY MANAGER'S OFFICE PHONE: 415-485-3070 FAX: 415-459-2242 March 3, 2016 By encrypted email: rnvriamc(a,auditonca.Pov Elaine M. Howle, CPA, California State Auditor* c/o Myriam Czarniecki, Audit Team Leader 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 Re: Response to Draft Audit Report re Residential Building Record Program Dear Ms. Howle: Thank you for providing our staff with a draft of your proposed report concerning your office's audit of the City of San Rafael's residential building record program, and allowing us to provide you with our responses to the report's recommendations. The fundamental goal of the City's residential building record program is to protect the health, safety and welfare of the City's residents by detecting and obtaining correction of illegal and noncompliant structures. We believe your report points out the merits of the program in advancing that goal. We also find your recommendations to be reasonable and valuable in advancing the effectiveness and transparency of the City's processes and record-keeping, and their implementation could only improve our program, As the report acknowledges, our staff has finite resources with which to implement the residential building record program, and this will likely be the overarching limitation on our ability to implement all of the additional processes recommended in the short term; however the report provides us with a reasonable plan for improvement of the program. We do want to acknowledge the courtesy and professionalism demonstrated by all the members of the audit team assigned to this matter. They performed their work in a directed, neutral, and considerate manner that greatly enhanced our staff's experience with the audit process. Very truly yours, JIM SCHUTZ City Manager 1400 FIFTH AVENUE PO Box 151560 SAN RAFAEL, CA 94915-1560 W W W.CITYOFSANRAFAEL.ORG * California State Auditor's comment appears on page 45. 44 California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-134 I 45 March 2016 Comments CALIFORNIA STATE AUDITOR'S COMMENT ON'rHE RESPONSE FROM THE CITY OF SAN RAFAEL To provide clarity and perspective, we are commenting on the response to our audit from the city of San Rafael (San Rafael). The number below corresponds to the number we placed in the margin of San Rafael's response. San Rafael indicates that finite staff resources will likely limit (D its ability to implement all of the additional processes we recommended in the short term. However, the city does not identify the specific recommendations that would be affected by this limitation, We look forward to the city providing this detail, as well as its plans and actions to implement the recommendations in its 6o -day, six-month, and one-year responses. 46 California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only. THE CITY OF NOVATO CA LIFC)RNIA March 4, 2016 Elaine M. Howle, CPA* State Auditor 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 California State Auditor Report 2015-134 March 2016 922 Machin Avenue Re: Response to Audit 2015-134 Novato, CA 94945 415/899-8900 FAX 415/899-8213 Dear Ms. Howle: uw�,v.tovataorg The following constitutes the formal responses from the City of Novato regarding Mayor the audit recommendations for our residential resale inspection program. We Pat Eklund Mayor Pro Tem appreciate the careful examination of our program by your staff and look forward Denise Athas to formalizing several of our procedures for great clarity to home sellers, buyers Councilmembers and the real estate community. Pam Drew Josh Fryday We do, however, have a fundamentally different view of our resale inspection Eric Lucan program than that held by your staff, which we expressed in two conferences with the auditors. Section 4-8.1 of our Municipal Code clearly states the purpose of the City Manager resale inspection program is to provide "information about property proposed for Nlichael S. Frank sale or transfer in order to protect their welfare and legal interest during the sale or transfer of property." This section goes on to state, "it is also the purpose of this section to assist the city in abating public nuisances and enforcing established building and zoning ordinances by identifying properties in need of rehabilitation or in violation of city codes." There is nothing in this ordinance that mandates or establishes procedures for subsequent enforcement actions related to violations identified during the inspection process. We therefore take exception to recommendations of the audit that speak to mandating enforcement of all violations discovered during the resale inspections without regard to the relative severity of such code violations as they affect the health and safety of homeowners. City resources are limited, and it is critical for the City to retain the discretion to prioritize the caseload of our code enforcement officers related to these and all other citywide code enforcement service requests. 47 0 r-, D As also stated in Section 4-8.1 of the Municipal Code, the ordinance establishes the resale inspection program, "to assist in, but not guarantee, the disclosure of information from city records about real property within the city." The recommendation that the City must monitor all residential property transactions to ( assure that all properties being sold have applied for a resale inspection report and further, that the City initiate a process to assure that all buyers have been provided with such reports from the sellers, is both inconsistent with the stated purposes of the ordinance and presents practical difficulties in that the City only has access to data sources on property transfers from the County Assessor that is frequently months old, after property transactions have been concluded and the responsible seller is no longer in control of the property and in many cases no longer resides in the area. Nonetheless, we will explore other potential data sources to allow for such monitoring, and look forward to viewing the full report to see whether the other audited programs have established procedures to do so. California State Auditor's comments begin on page 53. 48 California State Auditor Report 2015-134 March 2016 Specific responses to each of the report recommendations is provided in an attached table. Again, we appreciate the opportunity to examine the quality, accuracy and efficiency of our programs, and commit to continually improving our public services. Sincerely, Cathy Capriola Interim City Manager cc: City Council, City Attorney, Community Development Director California State Auditor Report 2015-134 49 March 2016 Responses to State Audit Report 2015-134 on Resale Inspection Program 2. Receipt of Purchaser's Verification of Report Receipt. To verify that new property owners are aware of the health and safety concerns at their properties and any corrections they need to make, Novato should develop a process to ensure that it receives homeowners' cards. 3. Create a Complaint Process. To ensure that it can monitor the satisfaction individuals have with the resale record program and that it has a uniform approach for resolving complaints, Novato should develop a formal process for tracking the complaints received. In addition, it should develop a formal policy that describes how staff should evaluate complaints, and it should document its activities associated with resolving complaints, such as the resolution and rationale for the resolution. The city should also establish a designated location in its database to record this information. occurred will not put the City in a position to create recourse for a non-compliant seller who has already disposed of the subject property. The City could request that the local realtors inform the City of properties which are in contract for sale. However, response from the realtors would not be guaranteed. This is essentially what occurs now with the realtors notifying the property owners of the requirement for inspection. The City knows of no way to ensure return of the homeowner's cards. The City's ordinance requires the seller to return the homeowner card, since it is the seller who is required to obtain the inspection and comply with the ordinance. However, once the sale transaction has completed, the City has no way to know the seller's new address and in many instances the seller is no longer present in the jurisdiction. The City will review the availability of alternate data sources to implement such a monitoring program with the Marin Association of Realtors. The City will implement these recommendations. 1. Monitor All Property Sales. We know of no data source that can provide information To ensure that it is aware of regarding all property sale transactions in advance of the compliance with its respective transaction being completed. County Assessor data is . ordinances, Novato should implement updated periodically, but is not timely enough to provide procedures that can help it monitor the advance notification to the city to initiate contacts with sale or exchange of properties that property owners to submit for a resale inspection, since require resale record inspections. The that information is only updated by the County Assessor city should work with applicable AFTER the transfer transaction is complete. Since the City's stakeholders, such as realtors, to aid in ordinance places the responsibility for a resale inspection this effort. on property sellers, finding out months after a transfer has 2. Receipt of Purchaser's Verification of Report Receipt. To verify that new property owners are aware of the health and safety concerns at their properties and any corrections they need to make, Novato should develop a process to ensure that it receives homeowners' cards. 3. Create a Complaint Process. To ensure that it can monitor the satisfaction individuals have with the resale record program and that it has a uniform approach for resolving complaints, Novato should develop a formal process for tracking the complaints received. In addition, it should develop a formal policy that describes how staff should evaluate complaints, and it should document its activities associated with resolving complaints, such as the resolution and rationale for the resolution. The city should also establish a designated location in its database to record this information. occurred will not put the City in a position to create recourse for a non-compliant seller who has already disposed of the subject property. The City could request that the local realtors inform the City of properties which are in contract for sale. However, response from the realtors would not be guaranteed. This is essentially what occurs now with the realtors notifying the property owners of the requirement for inspection. The City knows of no way to ensure return of the homeowner's cards. The City's ordinance requires the seller to return the homeowner card, since it is the seller who is required to obtain the inspection and comply with the ordinance. However, once the sale transaction has completed, the City has no way to know the seller's new address and in many instances the seller is no longer present in the jurisdiction. The City will review the availability of alternate data sources to implement such a monitoring program with the Marin Association of Realtors. The City will implement these recommendations. 50 0 California State Auditor Report 2015-134 March 2016 Report Recommendation, ity Respo se 4. Formalize Enforcement Process for Correction of Violations. Novato should develop formal written procedures for staff to follow up on a property owner's correction of violations. These procedures should identify the following: - The method in which staff document in the database the violations identified during inspections and their actions to bring the property into compliance. In addition, the procedures should identify where within the database these documents should be kept. - The protocol for ensuring that repeat violations are corrected in a timely manner. 5. Formalize Enforcement Process for Correction of Violations & Address Backlog. To ensure that property owners correct violations in a time manner, Novato should do the following: - Develop a work plan by July 2016 to identify and address its enforcement backlog by April 2017, so that the city is up to date with its enforcement actions, such as issuing notice letters and monitoring property owners' actions to resolve violations. Novato's work plan should also include updating the completion status of the violations so unresolved violations can be identified and monitored for subsequent correction, - Follow through with its enforcement policies, such as issuing notice letters. - Establish a written process for inspectors to monitor and ensure that property owners correct violations, including accurately identifying the properties that have not obtained necessary permits or have not had required reinspections performed. The City will prepare formal written procedures for staff follow-up on a property owner's correction of violations. However, the City reserves the authority to prioritize enforcement follow up efforts based on the severity or potential health risks associated with identified violations and funding and staffing resources. The City will develop a work plan relating to enforcement actions resulting from the program, including the backlog of identified violations, issuance of notice letters and monitoring by the identified dates and will establish written procedures where appropriate. However, the City reserves the authority to prioritize enforcement follow up efforts based on the severity or potential health risks associated with identified violations and funding and staffing resources. 6. Establish & Track Time Goals for Report Completion. To ensure that it conducts its resale record inspections and complete the reports in a timely manner, Novato should do the following: - Establish a process to monitor its ability to meet its established time goals from application date to report issuance, such as developing a reminder report or using an automated feature of its database, - Review its time goals by July 2016 and establish an expectation that is significantly shorter than 10 business days for the period from inspection to report issuance and that would be commensurate with the effort required to issue the report. Further, it should establish a time goal for the period of application to inspection. If applicable, Novato should update its policies and procedures to reflect the revised time goals. - Establish a method to identify those inspections that have inspection dates requested by property owners. 7. Track Officer Training. To ensure that it can demonstrate this its resale record inspectors are qualified, the following should occur: - Novato should develop a process to maintain continuing education attendance records. The city should ensure that staff receive periodic continuing education through internal and external sources to enable them to be current on the building standards code requirements, especially when the requirements are updated. California State Auditor Report 2015-134 March 2016 The City currently averages 5.6 days between the date of inspection and report completion, so a goal that is more commensurate with our actual performance can be established. Since our overall average time from application date to report completion is 11 days, an overall time goal from application to report completion will be established along with a process for monitoring. The City will indicate in the inspection log whether a later inspection date than the first available date has been requested by the property owners. The City will implement these recornmendations. 51 52 California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-134 53 March 2016 Comments CALIFORNIA STATE AUDITOR'S COMMENTS ON THE RESPONSE FROM THE CITY OF NOVATO To provide clarity and perspective, we are commenting on the response to our audit from the city of Novato (Novato). The numbers below correspond to the numbers we have placed in the margin of Novato's response. Novato indicates that its residential building record (resale record) ordinance does not require the city to engage in enforcement actions pertaining to violations identified during residential resale record inspections. This response is inconsistent with the provision in the ordinance—enacted pursuant to Novato's constitutional police power to legislate on behalf of the health and welfare of the city's residents—that an additional reason for the inspection program is to assist the city in abating nuisances and enforcing building and zoning ordinances. It is unclear how this ordinance can assist Novato to enforce California Building Standards Code requirements and related ordinances if the city does not have a system to enforce violations that are revealed in the course of a resale record inspection. We stand by our recommendations on pages 39 and 40 pertaining to the correction of violations identified during resale record inspections. Although Novato's response emphasizes the need to prioritize enforcement efforts based on the severity of code violations, we noted on page 24 of our report that it generally gives the owner 30 days from the date of the resale record report to resolve any violations that require permits or reinspection before it issues a reminder letter or notice letter. The city's current policy for following up on violations requiring these actions does not address any type of prioritization. We encourage the city to specify in its policy how staff should prioritize enforcement. In addition, the other two cities we audited had similar enforcement policies and ordinances related to identifying violations, but they did not raise any concerns about formalizing their enforcement processes. Because the stated purposes of Novato's disclosure ordinance are 0 to assist in the disclosure of property -related information to the parties and to assist the city in identifying properties that have code violations, it is our position that having better information regarding the occurrence of residential real property transactions and having signed homeowner cards would enhance the city's confidence that buyers and sellers are more fully complying with the resale record ordinance and that the purposes of the ordinance are being met. To clarify, our recommendation on page 38 is focused on Novato being able to monitor the property transfer 54 California State Auditor Report 2015-134 March 2016 transactions in order to inform it of the degree that property owners have complied with obtaining resale record reports, but it does not specify that the monitoring occur in advance of property sale transactions being completed. As we discuss on pages 15 and 16, the city is not monitoring this information. Thus, it cannot know how well the ordinance is being followed and take steps to gain greater compliance from stakeholders in the future. Even if the information Novato uses is several months old, the information is still valuable in determining compliance. We encourage the city to explore methods to address this recommendation, and we look forward to learning of the city's progress in its 6o -day, six-month, and one-year responses, California State Auditor Report 2015-134 55 March 2016 OFFICE OF THE CITY MANAGER March 3, 2016 Elaine IN -1. Howle State Auditor 621 Capital Mall, Suite 1200 Sacramento, CA 95814 Dear his. Howle: The City of Pasadena appreciates the California State auditor's resources provided for evaluating the city's residential occupancy inspection program, As mentioned in the draft report, the city's program is one of a few dozen throughout California that provides consumer protection to home purchasers and enhances health and safety regulations. The draft report has been reviewed by various city staff. Attached are the City of Pasadena's comments to recommendations included in Report Number 2015-134. If you or the audit team wishes to discuss our comments or the report further, please contact David Reyes, Interim Director of Planning and Community Development, at 626/744-4650 or davidreyes@cirj,ofhasadena.net. Sincerely, Steve IVlermell Interim City Manager Slbi:ah Attachment city Hall 100 N. Garfield Avenue, Room 229 Maiting Address P.D. Box 7115 • Pasadena 91109-7215 (626) 744.6936 • Fax (626) 744.4774 sm(,,rmell@cityofpasadena.net California State Auditor's comments appear on page 61, 56 California State Auditor Report 2015-134 March 2016 City of Pasadena Response to Report 2015-134 The City of Pasadena respectfully submits the following responses to the recommendations within draft report 2015-134. RECOMMENDATION #1 - To ensure that it is aware of the degree of compliance with its respective ordinances, Pasadena should implement procedures that can help it monitor the sale or exchange of properties that require resale record inspections. Pasadena should work with stakeholders, such as realtors, to aid in this effort. G) RESPONSE - The City of Pasadena respectfully disagrees with this recommendation. The City's current ordinance, rules and regulations, and policies provide a reasonable way for the city to monitor the sale or exchange of properties. RECOMMENDATION #2 — To verify that new property owners are aware of the health and safety concerns at their properties and any corrections they need to snake, Pasadena should develop a process to ensure that staff sign the inspection certificates and add them to the city's database. RESPONSE — The City of Pasadena agrees with this recominendation. The Interim Director of the Planning and Community Development Department will issue a memorandum outlining the process for staff to sign inspection certificates and add them to the city's land management system. The City anticipates reporting completion of this item in its scheduled report due at the 60 day interval, RECOMMENDATION #3 - To ensure that it can monitor the satisfaction individuals have with the resale record program and that it has a uniform approach for resolving complaints, Pasadena should develop a formal process for tracking the complaints received. In addition, it should develop a formal policy that describes how staff should evaluate complaints, and it should document its activities associated with resolving complaints, such as the resolution and the rationale for the resolution. The city should also establish a designated location in its database to record this information. RESPONSE — The City of Pasadena agrees with this recommendation. A process will be developed for staff to note in the City's land management system complaints received and their resolution. The Interum Director of the Planning and Community Development Department will issue a memorandum to inform staff of the process and direct staff to enter complaints into the city's land management system. The Cit), anticipates reporting completion of this item in its scheduled report due at the 60 day interval. RECOMMENDATION #4 - Pasadena should develop formal written procedures for staff to follow up on a property owner's correction of violations. These procedures should identify the following: A. The method in which staff document in the database the violations identified during inspections and their actions to bring the property into compliance. In addition, the procedures should identify where within the database these documents should be kept. B. The protocol for ensuring that repeat violations are corrected in a timely manner. Page 1 of 4 California State Auditor Report 2015-134 57 March 2016 City of Pasadena Response to Report 2015-134 RESPONSE — The City of Pasadena agrees with this recommendation. A. The Interim Director of the Planning and Community Development Department will issue a memorandum to inform staff of the method to document violations in the land management system. The City anticipates reporting completion of this item in its scheduled report due at the six month interval. B. The City will consider a protocol to address repeat violations. Any formal written procedures will involve input from local stakeholders and if there are any changes to current protocols, the changes will be issued to staff by memorandum from the Interim Director of the Planning and Community Development Department. The City will provide progress reports of this item in its scheduled reports. RECOMMENDATION #5 - To ensure that property owners correct violations in a timely manner, Pasadena should do the following: A. Develop a work plan by July 2016 to identify and address its enforcement backlog by April 2017, so that the city is up to date with its enforcement actions, such as issuing notice letters and monitoring property owners' actions to resolve violations. Pasadena's work plan should also include updating the completion status of the violations so unresolved violations can be identified and monitored for subsequent correction. B. Follow through with its enforcement policies, such as issuing notice letters. C. Establish a written process for inspectors to monitor and ensure that property owners correct violations, including accurately identifying the properties that have not obtained necessary permits or have not had required reinspections performed. RESPONSE — The City of Pasadena agrees with this recommendation. A. The Interim Director of Planning and Community Development will direct staff to identify and develop a work plan by July 2016 to address the backlog by April 2017. B. The Interim Director of the Planning and Community Development Department will issue a memorandum to remind staff of the enforcement policies related to issuing notice letters. The City anticipates reporting completion of this item in its scheduled report due at the 60 day interval. C. The Interim Director of the Planning and Community Development Department will also issue a memorandum with a written process for inspectors to monitor properties needing to correct violations or needing re -inspection. The City anticipates reporting completion of this item in its scheduled report due at the 60 day interval. RECOMMENDATION #6 - To ensure that it conducts its resale record inspections and complete the reports in a timely manner, Pasadena should do the following: A. Establish a process to monitor its ability to meet its established time goals from application date to report issuance, such as developing. a reminder report or using an automated feature of its Page 2 of 4 58 California State Auditor Report 2015-134 March 2016 City of Pasadena Response to Report 2015-134 database. Pasadena should also document the date the report is issued on the resale record report and in its database. B. Review its time goals by July 2016 for the resale record program and modify d1e>m if necessary, factoring in property owners' expectations and staff resources to complete the reports. If applicable, Pasadena should update its policies and procedures to reflect the revised time goals. C. Pasadena should also establish a method to identify those inspections that have inspection dates requested by property owners. RESPONSE A. The City of Pasadena agrees with the recommendation to monitor the established time goals. The City's Department of Information Technology is creating a report function to monitor the time from application date to report issuance. The report will be reviewed periodically to monitor the time goal. The City anticipates this item will be completed in April and included in its scheduled report due at the 60 day interval. 0 B. The City of Pasadena respectfully disagrees with the recommendation to review the time goal and modify them if necessary. The current policy and procedures in place related to time goals reflect the dedicated staff resources for this program, C. The City of Pasadena agrees with the recommendation to establish a method to identify inspection dates requested by property owners. The Interim Director of the Planning and Community Development Department will issue a memorandum directing staff to add notes to the city's land management system of property owner requested inspection dates. The City anticipates reporting completion of flus item in its scheduled report due at the 60 day interval. RECOMMENDATION #7 - To ensure that the resale record fees it charges is appropriate, the following should occur: A. Pasadena should finalize its formal fee study by April 2016 that incorporates the actual costs associated with the issuance of a resale records report by dwelling type. B. Pasadena should establish a time frame to periodically deterrmine whether the fees are commensurate with the cost of administering the resale record program. The city should ensure that it retains any documentation used to support its analyses and any subsequent adjustments to fees. RESPONSE — The City of Pasadena agrees with this recommendation. The City of Pasadena also acknowledges it significantly undercharges for the home occupation inspection fee. A. The fee study will be finalized by April 2016 and the city will retain the documentation used to support the analysis. B. The fee is already reviewed annually with City Council adoption of a fee schedule. The city will conduct a cost of service study periodically and will retain the documentation used to support the analysis. Page 3 of 4 California State Auditor Report 2015-134 59 March 2016 City of Pasadena Response to Report 2015-134 RECOMMENDATION #8 - To ensure that it can demonstrate that its resale record inspectors are qualified, the following should occur: A. Pasadena should develop a process to maintain continuing education attendance records. The citj- should ensure that staff receive periodic continuing education through internal and external sources to enable them to be current on the building standards code requirements, especially when the requirements are updated. B. If Pasadena subsequently requires its resale records inspectors to have ICC certifications, it should ensure that staff maintain them in good standing to perform their necessary job functions. RESPONSE A. The City of Pasadena agrees with the recommendation to maintain continuing education records. The Interim Director of the Planning and Community Development Department will issue a memorandum to staff requesting staff provide records periodically to the Department's Management Analyst who will maintain employee continuing education records. The City anticipates reporting completion of this item in its scheduled report due at the 60 day interval. B. The City of Pasadena respectfully disagrees and has no intention to require ICC certification for resale records inspectors. If an individual inspector has ICC certification it will be their personal responsibility to maintain the certification. 60 California State Auditor Report 2015-134 March 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-134 61 March 2016 Comments CALIFORNIA STATE AUDITOR'S COMMENTS ON THE RESPONSE FROM THE CITY OF PASADENA To provide clarity and perspective, we are commenting on the response to our audit from the city of Pasadena (Pasadena). The numbers below correspond to the numbers we placed in the margin of Pasadena's response. Although Pasadena states that its ordinance, rules and regulations, and policies provide a reasonable way to monitor the sale or exchange of properties, we believe the city should do more. As stated on page i5 of our report, Pasadena lacks procedures to monitor the sale or exchange of properties. In addition, as further noted on page 16, the city receives updates from the county assessor regarding property transfers, but it has not used this information to monitor property owners' compliance with the city's ordinance. We stand by our recommendation on page 40 that Pasadena review its time goals for the residential building record (resale record) program and modify them if necessary. As noted on page 30, the city did not meet its goal from application to inspection for eight of the 20 resale records we reviewed, which we believe warrants a review of its goals and action by the city to modify them if necessary so that property owners have appropriate timing expectations. Although Pasadena states that the city council reviews the fees annually, the fees are not always changed. We noted on page 32 that the city adjusted its fees periodically based on the consumer price index. However, as we also discuss on the same page, the city was unable to document how the current fee amounts were calculated and how those fees are commensurate with the costs incurred to operate its resale record program. We are unclear as to why Pasadena disagrees with this CD recommendation. As we note on page 37 of our report, the interim director of the planning and community development department acknowledged that his department would benefit from its resale record inspectors obtaining International Code Council certification so they would have advanced knowledge of code requirements. Accordingly, our recommendation on page 41 focuses on ensuring that staff maintain certifications in good standing if the city subsequently decides to require these certifications. California State Auditor - Report 2015-134 Summary - March 2016 Report 2015-134 Summary - March 2016 Residential Building Records: The Cities of Sari Rafael, Novato, and Pasadena Need to Strengthen the Implementation of Their Resale Record Programs HIGHLIGHTS Page 1 of 4 Tweet Share o Share Our audit concerning the administration of residential building record (resale record) programs by the cities of San Rafael, Novato, and Pasadena revealed the following: • The three cities are not fully complying with their respective resale record ordinances and policies. • None of the cities have procedures or are monitoring to identify residential properties that are sold or exchanged. • The cities do not have formal processes to address complaints consistently nor do they track the complaints they receive or their resolutions. • Although the cities have policies for following up on inspections that identify violations requiring action from property owners, none of the cities consistently do so. • Each city has a significant backlog of properties with unresolved violations that require permits or reinspections. • The cities established time goals for their resale record programs, but they are not monitoring compliance with them, and San Rafael and Pasadena did not always meet their goals. • The cities are likely undercharging property owners for inspections of single family and condominium dwellings. • The cities have not established continuing education requirements to ensure that their staff remain current on California Building Standards Code requirements. Results in Brief The cities of San Rafael, Novato, and Pasadena have each adopted a residential building record (resale record) ordinance that requires property owners who intend to sell their property to obtain a review of the city's records of that property, including an inspection for health and safety concerns, before the sale or transfer.' More specifically, the ordinances of San Rafael and Novato require that property owners of single family dwellings and multifamily dwellings obtain an inspection of the property from the city and that the city prepare a resale record report (report) and make it available to prospective buyers before the sale of the property. Pasadena's ordinance requires that a property owner obtain a city inspection of the property and that the city issue a Certificate of Inspection (inspection certificate) before the property is transferred. If Pasadena identifies violations during the inspection, it issues a report to the property owner and follows up on corrections of the violations before issuing the inspection certificate.z The reports for all three cities identify violations of the California Building Standards Code (code) and their municipal codes. The code identifies a wide range of building requirements, from regulating electrical work to requiring that handrails be a specific height. If the cities identify violations, they can require the property owner to correct the violations and, if necessary, obtain the appropriate building permits from the city. The three cities we reviewed are not fully complying with their respective resale record ordinances. Specifically, none have procedures in place or are monitoring to identify properties that are sold or exchanged, which limits their ability to ensure that inspections are being performed as required. In addition, Pasadena's records for inspection certificates were missing or incomplete for 10 of the 17 properties we reviewed that had application dates from July 2014 through October 2015. Without an inspection certificate, the city lacks assurance that the http://www.auditor.ca.gov/reports/summary/2015-134 3/24/2016 California State Auditor - Report 2015-134 Summary - March 2016 Page 2 of 4 property is in compliance with the ordinance related to the health and safety of its residents. Furthermore, San Rafael and Novato are unable to document in certain instances that buyers are aware of health and safety violations that exist at their new properties, as their respective ordinances require. According to the three cities, their priority is conducting inspections and identifying violations, and the owners are responsible for requesting and obtaining the appropriate documents. However, because each city requires that property owners obtain certain documents before the sale or exchange of a property and the cities have specific responsibilities, we believe the cities should take steps to monitor compliance with their local laws, such as working with their county assessors to be aware of property transfers. In addition to not complying with all aspects of their ordinances, none of the three cities have formal processes to address complaints consistently nor do they track the complaints they receive or their resolutions. For the purpose of our review, we defined a complaint as a statement of dissatisfaction with an action or request the city made of a property owner pertaining to the program. The lack of formal complaint processes raises concerns about the cities' ability to readily demonstrate fairness and appropriateness in resolving complaints. We also noted that none of the three cities have a designated location in their databases for documenting information about complaints and resolutions. Furthermore, although San Rafael, Novato, and Pasadena have policies and procedures for following up on inspections that identify violations requiring action from property owners, none of the cities consistently follow them. Specifically, for violations that require permits or reinspection, the cities should be issuing a reminder letter (notice letter) to the property owners of the corrections needed and then monitoring the promptness of owners' correction of the violations. Despite these policies, each city has a backlog of properties with unresolved violations that require permits or reinspection. Novato and Pasadena generated reports that identified numerous cases—more than 300 in Novato over the past nine years and nearly 4,600 in Pasadena during the past 15 years—that appear to still have outstanding violations from an inspection. However, we identified some cases within Pasadena's report in which the violations appear to have been resolved, so the actual number of resale record cases with outstanding violations is likely less. San Rafael cannot generate a summary report to identify all properties with outstanding violations because it did not identify the status of inspections of its resale record cases in its database until December 2015. However, it estimated that the backlog of properties with unresolved permit violations was about 150 cases as of November 2015 for properties that had resale record inspections in 2015. San Rafael does not know how many cases may still have unresolved violations until staff review each of the older cases in its database. The three cities cite staff workload as the primary cause of their backlogs, although they have taken some action over the past two years to temporarily bolster their efforts at directing property owners to correct violations. However, they need to take more action. The cities have established time goals for their resale record programs, but they are not monitoring compliance with them, and San Rafael and Pasadena do not always meet their goals. San Rafael and Pasadena have a time goal that measures the date an individual submits an application for the resale record report to the date of the inspection of the property (application to inspection), and then from the inspection date to the date the report is issued (inspection to report issuance). San Rafael's goal is 12 business days from application to inspection and two business days from inspection to report issuance. Pasadena's goal is seven calendar days from application to inspection and one calendar day from inspection to report issuance. Novato measures only the period from inspection to report issuance with a goal of 10 business days. Based on our review of 20 resale record reports from each city that were initiated from July 2014 through October 2015, San Rafael and Pasadena had some instances where they did not meet their goals, ranging from one to two additional business days and two to 20 additional calendar days, respectively. Novato met its time goal of 10 business days from inspection to report issuance for all 20 properties we reviewed, although this goal appears to be much longer than the city needs. The three cities have based the fees they charge for their resale record programs on cost studies that were prepared many years ago. Additionally, San Rafael and Pasadena were unable to provide the detailed support for the cost http://www. auditor. ca.gov/reports/summary/2015-134 3/24/2016 California State Auditor - Report 2015-134 Summary - March 2016 Page 3 of 4 studies they used to establish their fees. Novato was able to produce the detailed support for its current fees, but it did not perform an analysis until January 2016 at our prompting, in which it concluded that the city had subsidized its program by $30,200 in fiscal year 2014-15. To assess the reasonableness of the cities' current fees, we calculated the basic costs the cities incur to conduct an inspection. Our analysis showed that San Rafael and Novato are likely undercharging for inspections of single family and condominium dwellings, which are the most common types of fees these cities charge. However, we could not determine if Pasadena was undercharging property owners because it was unable to quantify its overhead costs pertaining to the resale record inspections. Subsequent to our closing conference, Pasadena provided us with a draft cost study in which its consultant concluded that the city is currently undercharging for inspections. The city relied on the consultant's expertise to identify overhead costs, which the consultant was able to extract from the city's accounting system. Finally, we determined that most of the resale record inspection staff the cities employed during the past five years either met or exceeded the minimum qualifications for their positions. We were unable to verify the qualifications of one former city employee and three contracted inspectors in San Rafael because the city did not have the applicable supporting records. The responsibilities of resale record inspection staff vary among the three cities, which accounts for differences in the minimum job qualifications each city established. Although resale record inspectors at the three cities have attended continuing education sessions regarding building standards, the cities have not established continuing education requirements to ensure that their staff remain current on code requirements. Because these code requirements are subject to change and have changed every three years, the frequency of these changes directly impacts the inspectors' responsibilities, which emphasizes the importance of participating in relevant continuing education. Recommendations To ensure that the cities are aware of the degree of property owners' compliance with the cities' ordinances, San Rafael, Novato, and Pasadena should implement procedures that can help them monitor the sale or exchange of properties that require resale record inspections. San Rafael and Novato should also develop a process to verify that new property owners are aware of health and safety concerns regarding their property and any corrective actions they need to make. In addition, Pasadena should develop a process to ensure that staff sign the inspection certificates and add them to the city's database. To ensure that the three cities can monitor stakeholders' satisfaction with their respective resale record programs and to ensure that they each have a uniform approach for resolving complaints, San Rafael, Novato, and Pasadena should develop a formal process for tracking the types of complaints they receive and how well they resolve those complaints. To ensure that property owners correct violations in a timely manner, each city should develop a work plan by July 2016 to identify and address its respective enforcement backlog by April 2017, so that the cities are up to date with their enforcement actions, such as issuing notice letters and monitoring property owners' actions to resolve violations. To ensure that the cities conduct their resale record inspections and complete the reports in a timely manner, they should establish a process to monitor how they are meeting their established time goals from application date to report issuance, such as developing a reminder report or using an automated feature of their databases. Novato should also establish an expectation that is significantly shorter than 10 business days for the period from inspection to report issuance; further, it should establish a time goal for the period of application to inspection. http://www.auditor.ca.gov/reports/summary/2015-134 3/24/2016 California State Auditor - Report 2015-134 Summary - March 2016 Page 4 of 4 To ensure that the resale record fees the cities charge are appropriate, San Rafael should conduct a formal fee study by December 2016 that incorporates the actual costs associated with the issuance of a resale record report by dwelling type, and Pasadena should finalize its formal fee study by April 2016. All three cities should develop a process to maintain continuing education attendance records and ensure that staff receive periodic continuing education through internal and external sources to enable them to remain current on code requirements, especially when the requirements are updated. Agency Comments San Rafael and Novato generally concurred with our recommendations., However, Novato questioned the feasibility of monitoring property owners' compliance with certain aspects of its resale record ordinance, but the city stated it will explore options to implement the recommendation. Although Pasadena also concurred with most of our recommendations, it disagreed with a few of them because the city believes its current processes are sufficient. Footnotes I Pasadena's ordinance is known as the inspection ordinance, and its application is triggered when a property is vacated,and then reoccupied. For the purpose of this audit report, we refer to it and the program the city administers—the Occupancy Inspection Program—as resale record ordinance and resale record program. 2 If the property owner wants to sell the property "as is," the buyer can sign a Transfer of Responsibility form (transfer), which states that he or she will resolve any outstanding code violations. When the city receives a signed transfer, it issues a temporary inspection certificate. • View this entire report in Adobe Portable Document Format (PDF) • Agencies/Departments Related to This Report; • Novato, Citv of • Pasadena, Citv of • San Rafael, Citv of • Return to the home oaae of the California State Auditor http://www. auditor, ca. gov/reports/summary/2015-134 3/24/2016 Califorriia State Auditor - Report 2015-134 Summary - March 2016 Report 2015-134 Summary - March 2016 Residential Building Records: The Cities of San Rafael, Novato, and Pasadena Need to Strengthen the Implementation of Their Resale Record Programs HIGHLIGHTS Page 1 of 4 Tweet Share Co Share Our audit concerning the administration of residential building record (resale record) programs by the cities of San Rafael, Novato, and Pasadena revealed the following: • The three cities are notfully complying with their respective resale record ordinances and policies. • None of the cities have procedures or are monitoring to identify residential properties that are sold or exchanged. • The cities do not have formal processes to address complaints consistently nor do they track the complaints they receive or their resolutions. • Although the cities have policies for following up on inspections that identify violations requiring action from property owners, none of the cities consistently do so. • Each city has a significant backlog of properties with unresolved violations that require permits or reinspections. • The cities established time goals for their resale record programs, but they are not monitoring compliance with them, and San Rafael and Pasadena did not always meet their goals. • The cities are likely undercharging property owners for inspections of single family and condominium dwellings. • The cities have not established continuing education requirements to ensure that their staff remain current on California Building Standards Code requirements. Results in Brief The cities of San Rafael, Novato, and Pasadena have each adopted a residential building record (resale record) ordinance that requires property owners who intend to sell their property to obtain a review of the city's records of that property, including an inspection for health and safety concerns, before the sale or transfer.' More specifically, the ordinances of San Rafael and Novato require that property owners of single family dwellings and multifamily dwellings obtain an inspection of the property from the city and that the city prepare a resale record report (report) and make it available to prospective buyers before the sale of the property. Pasadena's ordinance requires that a property owner obtain a city inspection of the property and that the city issue a Certificate of Inspection (inspection certificate) before the property is transferred. If Pasadena identifies violations during the inspection, it issues a report to the property owner and follows up on corrections of the violations before issuing the inspection certificate? The reports for all three cities identify violations of the California Building Standards Code (code) and their municipal codes. The code identifies a wide range of building requirements, from regulating electrical work to requiring that handrails be a specific height. If the cities identify violations, they can require the property owner to correct the violations and, if necessary, obtain the appropriate building permits from the city. The three cities we reviewed are not fully complying with their respective resale record ordinances. Specifically, none have procedures in place or are monitoring to identify properties that are sold or exchanged, which limits their ability to ensure that inspections are being performed as required. In addition, Pasadena's records for inspection certificates were missing or incomplete for 10 of the 17 properties we reviewed that had application dates from July 2014 through October 2015. Without an inspection certificate, the city lacks assurance that the http://www.auditor.ca.gov/reports/summary/2015-134 3/24/2016 California State Auditor - Report 2015-134 Summary - March 2016 Page 2 of 4 property is in compliance with the ordinance related to the health and safety of its residents. Furthermore, San Rafael and Novato are unable to document in certain instances that buyers are aware of health and safety violations that exist at their new properties, as their respective ordinances require. According to the three cities, their priority is conducting inspections and identifying violations, and the owners are responsible for requesting and obtaining the appropriate documents. However, because each city requires that property owners obtain certain documents before the sale or exchange of a property and the cities have specific responsibilities, we believe the cities should take steps to monitor compliance with their local laws, such as working with their county assessors to be aware of property transfers. In addition to not complying with all aspects of their ordinances, none of the three cities have formal processes to address complaints consistently nor do they track the complaints they receive or their resolutions. For the purpose of our review, we defined a complaint as a statement of dissatisfaction with an action or request the city made of a property owner pertaining to the program. The lack of formal complaint processes raises concerns about the cities' ability to readily demonstrate fairness and appropriateness in resolving complaints. We also noted that none of the three cities have a designated location in their databases for documenting information about complaints and resolutions. Furthermore, although San Rafael, Novato, and Pasadena have policies and procedures for following up on inspections that identify violations requiring action from property owners, none of the cities consistently follow them. Specifically, for violations that require permits or reinspection, the cities should be issuing a rerninder letter (notice letter) to the property owners of the corrections needed and then monitoring the promptness of owners' correction of the violations. Despite these policies, each city has a backlog of properties with unresolved violations that require permits or reinspection. Novato and Pasadena generated reports that identified numerous cases—more than 300 in Novato over the past nine years and nearly 4,600 in Pasadena during the past 15 years—that appear to still have outstanding violations from an inspection. However, we identified some cases within Pasadena's report in which the violations appear to have been resolved, so the actual number of resale record cases with outstanding violations is likely less. San Rafael cannot generate a summary report to identify all properties with outstanding violations because it did not identify the status of inspections of its resale record cases in its database until December 2015. However, it estimated that the backlog of properties with unresolved permit violations was about 150 cases as of November 2015 for properties that had resale record inspections in 2015. San Rafael does not know how many cases may still have unresolved violations until staff review each of the older cases in its database. The three cities cite staff workload as the primary cause of their backlogs, although they have taken some action over the past two years to temporarily bolster their efforts at directing property owners to correct violations. However, they need to take more action. The cities have established time goals for their resale record programs, but they are not monitoring compliance with them, and San Rafael and Pasadena do not always meet their goals. San Rafael and Pasadena have a -time goal that measures the date an individual submits an application for the resale record report to the date of the inspection of the property (application to inspection), and then from the inspection date to the date the report is issued (inspection to report issuance). San Rafael's goal is 12 business days from application to inspection and two business days from inspection to report issuance. Pasadena's goal is seven calendar days from application to inspection and one calendar day from inspection to report issuance. Novato measures only the period from inspection to report issuance with a goal of 10 business days. Based on our review of 20 resale record reports from each city that were initiated from July 2014 through October 2015, San Rafael and Pasadena had some instances where they did not meet their goals, ranging from one to two additional business days and two to 20 additional calendar days, respectively. Novato met its time goal of 10 business days from inspection to report issuance for all 20 properties we reviewed, although this goal appears to be much longer than the city needs. The three cities have based the fees they charge for their resale record programs on cost studies that were prepared many years ago. Additionally, San Rafael and Pasadena were unable to provide the detailed support for the cost http://www. auditor. ca. gov/reports/summary/2015-134 3/24/2016 California State Auditor - Report 2015-134 Summary - March 2016 Page 3 of 4 studies they used to establish their fees. Novato was able to produce the detailed support for its current fees, but it did not perform an analysis until January 2016 at our prompting, in which it concluded that the city had subsidized its program by $30,200 in fiscal year 2014-15. To assess the reasonableness of the cities' current fees, we calculated the basic costs the cities incur to conduct an inspection. Our analysis showed that San Rafael and Novato are likely undercharging for inspections of single family and condominium dwellings, whi.ch are the most common types of fees these cities charge. However, we could not determine if Pasadena was undercharging property owners because it was unable to quantify its overhead costs pertaining to the resale record inspections. Subsequent to our closing conference, Pasadena provided us with a draft cost study in which its consultant concluded that the city is currently undercharging for inspections. The city relied on the consultant's expertise to identify overhead costs, which the consultant was able to extract from the city's accounting system. Finally, we determined that most of the resale record inspection staff the cities employed during the past five years either met or exceeded the minimum qualifications for their positions. We were unable to verify the qualifications of one former city employee and three contracted inspectors in San Rafael because the city did not have the applicable supporting records. The responsibilities of resale record inspection staff vary among the three cities, which accounts for differences in the minimum job qualifications each city established. Although resale record inspectors at the three cities have attended continuing education sessions regarding building standards, the cities have not established continuing education requirements to ensure that their staff remain current on code requirements. Because these code requirements are subject to change and have changed every three years, the frequency of these changes directly impacts the inspectors' responsibilities, which emphasizes the importance of participating in relevant continuing education. Recommendations To ensure that the cities are aware of the degree of property owners' compliance with the cities' ordinances, San Rafael, Novato, and Pasadena should implement procedures that can help them monitor the sale or exchange of properties that -require resale record inspections. San Rafael and Novato should also develop a process to verify that new property owners are aware of health and safety concerns regarding their property and any corrective actions they need to make. In addition, Pasadena should develop a process to ensure that staff sign the inspection certificates and add them to the city's database. To ensure that the three cities can monitor stakeholders' satisfaction with their respective resale record programs and to ensure that they each have a uniform approach for resolving complaints, San Rafael, Novato, and Pasadena should develop a formal process for tracking the types of complaints they receive and how well they resolve those complaints. To ensure that property owners correct violations in a timely manner, each city should develop a work plan by July 2016 to identify and address its respective enforcement backlog by April 2017, so that the cities are up to date with their enforcement actions, such as issuing notice letters and monitoring property owners' actions to resolve violations. To ensure that the cities conduct their resale record inspections and complete the reports in a timely manner, they should establish a process to monitor how they are meeting their established time goals from application date to report issuance, such as developing a reminder report or using an automated feature of their databases. Novato should also establish an expectation that is significantly shorter than 10 business days for the period from inspection to report issuance; further, it should establish a time goal for the period of application to inspection. http://www.auditor.ca.gov/reports/summary/2015-134 3/24/2016 California State Auditor - Report 2015-134 Summary - March 2016 Page 4 of 4 To ensure that the resale record fees the cities charge are appropriate, San Rafael should conduct a formal fee study by December 2016 that incorporates the actual costs associated with the issuance of a resale record report by dwelling type, and Pasadena should finalize its formal fee study by April 2016. All three cities should develop a process to maintain continuing education attendance records and ensure that staff receive periodic continuing education through internal and external sources to enable them to remain current on code requirements, especially when the requirements are updated. Agency Comments San Rafael and Novato generally concurred with our recommendations. However, Novato questioned the feasibility of monitoring property owners' compliance with certain aspects of its resale record ordinance, but the city stated it will explore options to implement the recommendation. Although Pasadena also concurred with most of our recommendations, it disagreed with a few of them because the city believes its current processes are sufficient. Footnotes I Pasadena's ordinance is known as•the inspection ordinance, and its application is triggered when a property is vacated and then reoccupied. For the purpose of this audit report, we refer to it and the program the city administers—the Occupancy Inspection Program—as resale record ordinance and resale record program. z If the property owner wants to sell the property "as is," the buyer can sign a Transfer of Responsibility form (transfer), which states that he or she will resolve any outstanding code violations. When the city receives a signed transfer, it issues a temporary inspection certificate. • View this entire rer)ort in Adobe Portable Document Format (PDF) • Agencies/Departments Related to This Report: • Novato, Citv of • Pasadena, Citv of • San Rafael, Citv of • Return to the home naae of the California State Auditor http://www.auditor.ca.gov/reports/summary/2015-134 3/24/2016 ATTACHMENT 2 CITY OF SAN RAFAEL RBR TEMPLATE FOR RESALE REPORTS CITY OF _� 'MiNlrtn d`-ity f� _ BUILDING DIVISION Report of Residential Building Record (RBR) This Report of Residential Building Record is compiled from results of a visual inspection of the property and a review of the official records on file at the City. This inspection does not include an evaluation of the structural or seismic safety of the structure. The issuance of this report does not constitute a representation by the City that the property or its present use, is or is not in compliance with the law and the report does not constitute a full disclosure of all material facts affecting the property. Street Address: Assessor Parcel Number(s): Zoning District: Residential Building Report No. Issued By: Date of Report Issuance Report Expiration Date: Record of . Date Issued Permit # Description of Work: Permit Expired W/out Final Note: The above represents the record of permits that are on file with the City of San Rafael. The City encourages and recommends that the property owner compare the Citypermit records with their personal records to reconcile any discrepancies in this report. The property owner is encotcr-aged to prodrrce any plans, missing permits, and documentation to correct and/or dismiss any potential violations identified in this report Report is valid for 6 months from date of issuance unless extended by endorsement below: (Maximum extension is 3 months, and request for extension must be in writing) Extended from: to: by: City of San Rafael -'Building Inspection Division Report of Residential Building Record (RBR) 6/2014 Permit No. Date Issued: For Permit No. Date Issued: For ❑ Detached Garages ❑ Accessory Building ❑ Storage Sheds ❑ Decks ❑ Other Authorized Dwelling Units: ❑ Single Family Dwelling ❑ Single Family Dwelling with 2nd Unit ❑ Duplex ❑ Condominium/Townhouse ❑ Apartments Number of dwelling units observed at the time of inspection: ❑ No undocumented dwelling units observed. ❑ A second kitchen as defined by the San Rafael Municipal Code has been observed during this inspection. While a second kitchen is not a violation of San Rafael Municipal Zoning regulations, it may not used by a separate household or in conjunction with an unpermitted additional dwelling unit and will require permits to legalize. The second kitchen is described as follows: Description: ❑ An undocumented and possibly illegal additional dwelling unit has been identified during this inspection. Information must be submitted to document this unit's legality, a permit for this unit must be obtained to legalize it, or the unit must be abated. This issue has been referred to the Code Enforcement Division for follow-up and potential abatement of the undocumented dwelling unit. The undocumented unit is described as follows: Description: City of San Rafael - Building Inspection Division 2 Repot of Residential Building Record (RBR) 6/2014 The items listed below are important life/safety or sanitation issues and should be addressed, however it is the buyer's and/or seller's responsibility to mitigate the hazard, and as permits are generally not required to complete this work, no further action will be taken by the City. b b b Zi b Z� 07a. o ° o ❑❑❑❑ a N a� N v Ga -d U p+ N a.) d AG h a.UZri� P, Zrn EIDE]❑ Address Numbers Firewall (between garage and dwelling): ❑❑❑❑ Nonmetallic (Romex) electrical wiring ❑❑❑❑ Door between garage and dwelling requires unprotected in areas 7' below (must cover 1-3/8" solid wbod(or 20 min) with self-closing or place in conduit) and latching hardware Water beaters: ❑EIDE] Unprotected openings in firewall ❑❑ ❑ ❑ 18" above garage floor (in garage) ❑ ❑ ❑ ❑ Heat ducts or plastic plumbing pipe penetrating ❑❑❑❑ Strapping firewall within garage (minimum #26 gauge ❑[j❑❑ Gas shut off metal ducts or metal plumbing pipe required) D❑❑❑ Overflow pipe from TPR ❑❑❑❑ Bathroom exhaust fan (no window) ❑❑❑❑ Spa or pool fence/gate complies with City Code ❑ ❑ ❑ ❑ GFCI protection ❑ ❑ ❑ ❑ Spark arrestor on chimney ❑❑❑❑ Dishwasher, air gap on drain system ❑❑❑❑ Handrails on stairs ❑ ❑ ❑ ❑ Smoke Alarms ❑ ❑ ❑ ❑ Guardrails ❑ ❑ ❑ ❑ Carbon Monoxide Alarms ❑ ❑ ❑ ❑ Other Detailed Description: City of San Rafael - Building Inspection Division 3 Report of Residential Building Record (RBR) 6/2014 Permits for these items may be obtained at the Building Division Public counter in City Hall anytime during regular business hours. If these permits are obtained and the inspection approval granted within 15 days of the issuance of this report, no enforcement action will be taken by the City. Failure to do so will result in the issuance of a Notice to Abate. ❑ Replace Electric Service ❑ Exterior Siding ❑ Other: ❑ Reroofing ❑ Window Replacement ❑ Other: ❑ Wood Stoves and Inserts ❑ ❑ Other: ❑ Water Heater ❑ Furnace and/or Duct ❑ Permits previously issued ❑ Replacement Replacement 2nd Unit that have expired (see page 1) The following unpermitted work requires plans for review and the appropriate City permits. The Code Enforcement Division will be mailing the owner of record a "Notice to Abate" regarding these violations. This notice will provide a more detailed explanation of the violations and required remediation, as well as establish timelines for which you shall: submit plans, obtain a permit, perform the required remedial construction work (if needed), receive City inspections, and finalize the permit. ❑ Electrical Circuits ❑ Retaining Walls ❑ Basement Conversion ❑ Deck/Stair ❑ Remodel Laundry Room ❑ Garage Conversions ❑ Accessory Structures ❑ Remodel Bathroom(s) ❑ Courtyard Enclosure ❑ Structural Modification ❑ Remodel Kitchen ❑ 2nd Unit ❑ Self -Contained Spa ❑ Attic Conversion ❑ Other: ❑ Additions ❑ Permits previously issued that have expired (see page 1) Detailed Description Section D: Advisory Notations City of San Rafael - Building Inspection Division 4 Report of Residential Building Record (RBR) 6/2014 RETURN RECEIPT AND BUYER'S CERTIFICATION Report No. Date: Address: As Owner/Seller, I certify that I have received the report and a copy of this report has been given to the buyer along with this form. Seller's Signature Date Print Name Please note: The Buyer must return this certification to the City prior to close of escrow in order to comply with the San Rafael Municipal Code Section 12.36.050. In conformance with the requirements of the San Rafael Municipal Code, I certify that I am the BUYER of the residential building(s) noted above, and that I have received and read the RESIDENTIAL BUILDING RECORD prior to the consummation of the Sale or Exchange of said residential building(s). Buyer's Signature Print Name COMPLETE THIS FORM AND MAIL TO THE FOLLOWING ADDRESS: CITY OF SAN RAFAEL Building Inspection — RBR 1400 Fifth Avenue Box 151560 San Rafael, CA 94915-1560 City of San Rafael - Building Inspection Division 5 Report of Residential Building Record (RBR) 6/2014 ATTACHMENT 3 CITY OF SAN RAFAEL RBR POLICIES AND PRACTICES CITY OF SAN RAFAEL Residential Resale Inspection Report (RBR) Program Policies & Practices June 2014 Since the 1970's, the City of San Rafael has been administering and enforcing a residential resale inspection report (RBR) program. The RBR program requires that prior to the sale or exchange of any residential building in San Rafael, a City inspection must be conducted, along with a records search of City permits issued for the subject property. The RBR report is issued to the property owner. The provisions of and process for the RBR program are set forth in San Rafael Municipal Code Title 12 (Building Regulations), Chapter 12.36 (Report of Residential Building Record), which can be accessed at: httr)s://Iibrarv.municode.com/HTML/16610/level2/TIT12BURE CH12.36REREBLIRE.htm1#TOPTITLE In an effort to improve the administration and process of the RBR program, the City of San Rafael, in coordination and consultation with the Marin Association of Realtors (MAR), has developed a list of policies and practices. In addition to the information, FAQs, and checklists already provided on the web page, the purpose of these policies and practices is to: a) ensure that there is a clearer understanding on how the City administers the RBR program and what is expected with the inspection process; and b) encourage the real estate professionals and their clients to participate in the process so as to minimize delays and potential issues. What the City will do: ➢ City building inspector will verbally inform listing real estate agent and/or seller at site (during or following inspection) if there are violations that the City has encountered, which need to be corrected/permitted. ➢ City will not require permits for the following, unpermitted improvements/work if installed/constructed more than 25 years ago and determined by the City building inspector to be properly constructed: Kitchen or bathroom remodel, if not resulting in any new habitable square footage and if in compliance with zoning requirements (The unpermitted improvement will be photographed and noted in the RBR file) ➢ City will acknowledge unpermitted work/improvements completed prior to the date which the City permit requirement was established (e.g., prior to 2006, no building permits were required for installing new windows). See Table 1 (below), which outlines key milestone dates when permit requirements were initiated or imposed. ➢ City will waive permit fees and penalties for un permitted work or improvements that were completed prior the current owner's (seller's) purchase of the property if the corrective items were not noted on the prior City -issued RBR. Necessary permits will still need to be obtained, and the work inspected and approved. ➢ City has updated the RBR form/template to clearly indicate which corrective items require a re- inspection and which do not require a re -inspection. The updated RBR form/template has divided former Section B (Violations Requiring Permits, Inspection and Approval, which has an upper and lower checklist) into two new sections. New Section B lists minor un -permitted work CITY OF SAN RAFAEL Residential Resale Inspection Report (RBR) Program Policies & Practices June 2014 and the new Section C lists major un -permitted work and/or potential violations that have been identified. The updated RBR form/template can be accessed at: RBR Sample Report ➢ Updated RBR form/template includes contact information for the appropriate City staff to discuss potential violations or un -permitted work. Updated RBR form/template encourages seller to: a) compare City permit records with their personal records to reconcile any discrepancies in the RBR; and. b) produce any/all plans, missing permits and documentation, and/or privately -commissioned contractors report to correct and/or dismiss the potential violations listed in the RBR. ➢ Notice & Order document and process will be used to seek compliance when major, unpermitted work in new Section C on the RBR form has been identified. ➢ Notice & Order will not be initially used for minor un -permitted work listed in the new Section B on the RBR form (e.g., retroactive permit for window installation or closing -out an expired building permit). For this minor work, the RBR form will note a 15 -day grace period for the property owner to secure retroactive permits. In addition, the RBR form will note that failure to rectify the minor un -permitted work during the 15 -day grace period will result in the issuance of a Notice & Order. ➢ City has revised the format and content of Notice & Order document so that it is simpler and concise in content, identifying the potential violation(s), deadline for response and City staff contact information, When administered, the Notice & Order will be mailed to the property owner via first class US Mail Service, not certified mail. ➢ City has committed to periodically schedule and conduct a "Coffee & Codes" to present RBR process, procedures, ground rules, as well as policies and principles to MAR members/realtors. What MAR will do: ➢ MAR will continue to encourage the realtors to file the RBR request early in the sales process (e.g., prior to property listing). The early completion of the RBR will avoid last-minute scramble (e.g., during escrow) and would disclose potential violations earlier (more time to negotiate resolution or correct). ➢ MAR will advise realtors to encourage their clients to complete a records search of City (and County) permits and tax assessments before listing the property. This might assist in flagging issues (by seller and listing agent) before an RBR request is filed with the City. ➢ Realtors will encourage sellers to produce/submit old plans and/or missing permits, other documentation to confirm dates when improvements were made. Supplemental documentation could support the dismissal of violations or could augment City permit records. CITY OF SAN RAFAEL Residential Resale Inspection Report (RBR) Program Policies & Practices June 2014 TABLE 1 KEY MILESTONE DATES INITIATING CITY PERMIT REQUIREMENTS Activity BUILDING Window installation/replacement Egress window sill height requirements Minimum floor-to.ceiling height requirement ZONING Off-street parking (two spaces/dwelling) Covered off-street parking requirement (two spaces/dwelling) W:\ ... \RBR.policies&practices- webpost 6 26 14 Milestone Date (e.g., Permit Requirement Initiated by City) 2006 1976 1946 1973 1992 ROUTING SLIP / APPROVAL FORM INSTRUCTIONS: Use this cover sheet with each submittal of a staff report before approval by the City Council. Save staff report (including this cover sheet) along with all related attachments in the Team Drive (T:) --> CITY COUNCIL AGENDA ITEMS 4 AGENDA ITEM APPROVAL PROCESS 4 [DEPT - AGENDA TOPIC] Agenda Item # Date of Meeting: 4/4/2016 From: Paul Jensen Department: Community Development Date: 3/25/2016 Topic: Residential Building Resale Report (RBR) Program Subject: Report on and review of State of California Performance Audit of the City's Residential Building Resale (RBR) Program Type: ❑ Resolution ❑ Ordinance ❑ Professional Services Agreement ❑ Other: Accept Report APPROVALS ® Finance Director Remarks: approved - MM 3/27 ® City Attorney Remarks: LG- approved 3/28/16 with minor changes. ® Author, review and accept City Attorney / Finance changes Remarks: PJ- edits accepted 3/28/16 ® City Manager Remarks: