City won’t force homeowners to pay for its mistake
SNOHOMISH - The city reversed course last week on pursuing thousands of dollars from agitated homeowners for unpaid development fees the city never collected from the developer.
The City Council voted unanimously last week to leave 13 affected homeowners alone.
The council directed the city last month to try again to collect the fees from the development companies involved.
The homeowners have been affected throughout the issue.
The unpaid utility and school impact fees, which range from $3,000 to $20,000 on households, have been coming up as delinquencies on the homeowner’s titles any time the residents wanted to sell, refinance or access the equity on their homes.
The unpaid fees are tied to the homes, and someone has to pay up. Until late last month, the city held a steadfast stance that the homeowners who moved into the homes were responsible for fees, which are traditionally placed on developers during the city permitting process.
City Manager Larry Bauman couldn’t provide specifics on how exactly the city would recover the money. He has said before that the development company has no money.
Bauman wrote in an e-mail last week that “the city is conducting additional research and reassessing a variety of options regarding collection of fees from developers and their agents in order to prioritize these options and take further actions as they may be recommended by our attorneys.”
The unpaid fees total $112,239.
The council last month directed staff to seek a judgment from the defunct developer, Everett-based Dynasty Homes LLC, and also pursue money from Dynasty’s insurance policy.
City Councilman Greg Guedel led the change of direction.
Last week, Guedel made the motion to let the homeowners off the hook.
“When I made the motion that produced this result, it was a matter of setting a basic policy — our city government exists to serve the needs and interests of the people of Snohomish, and protecting innocent homeowners from other people’s mistakes is the right thing to do,” he wrote in an e-mail.
The problems prompted a Snohomish Police Department investigation looking into possible document forgeries.
A 2012 police investigation showed some of the unpaid fees could be tied to an insubordinate permitting manager who handed out building permits knowing she was supposed to collect the fees beforehand. Documents suggest the city’s former planning director knew fees weren’t being collected but was letting it slide. The city fired the permitting employee, agreed to a $20,000 cash settlement, and later gave her a written recommendation to another employer without mentioning her actions.
A 2008 city memo suggests city procedures weren’t consistently applied among departments going back to at least 2005. Including Dynasty’s fees, the official calculated a total of $454,000 in unpaid sewer connection and school mitigation fees owed to the city.
The city has repeatedly acknowledged the errors but said there’s little it can do. The city argues waiving the fees would be an illegal gifting of public funds.
Michele Kemper and several others spoke out at last week’s council meeting, calling the city’s previous allegation that the property owners were responsible for the debt “illegal.”
She also accuses Bauman of letting these debts slide.
“Snohomish Municipal Code requires reporting of debts over $1,000 to the City Prosecuting Attorney’s office and issuance of Stop Work Orders. Mr. Bauman’s office did neither of these — despite memos from a supervisor advising the need for action,” Kemper said in a written statement.
After the vote, she said that she was comfortable with the council’s decision.
“It was the right thing to do, it was the legal thing,” Kemper said.
Kemper’s family was hit hard with the consequences of the city’s mistake: She said a member of her family had a medical emergency right around the time her son was unexpectedly laid off from his job.
“We needed a sum of money immediately, and the city precluded us from accessing the equity on our home,” Kemper said. “We had to liquidate (my son’s) 401(k) down to the last dime, and pay a 30 percent penalty fee on top of that for early withdrawal, plus taxes too” in order to pay for her family’s emergency situation.
She was unnerved by some of Mayor Karen Guzak’s word choices on releasing the homeowners from the fees.
“She kept saying that this is a ‘gift,’” Kemper said. “Our view is that this is not a gift because the price of the home included all these fees. It’s ours and we already paid for it.”
A majority of council members expressed that releasing the homeowners was the right thing to do.
“It was the right thing to do,” Councilman Tom Hamilton said about his vote. “It took this long to come to a resolution because of the many complex legal issues. This council has always felt this was the right thing to do.”