"It is our understanding that they utilize the known fine amounts and lien, before purchase, to negotiate a lower price," Code Enforcement Director Diane Flagg wrote in an email.
NAPLES — It was the pool that sealed the deal.
Steve Hamro, a representative with S&W Partners, said the company bought a house to fix up and sell. They fixed it up quickly, but not as quickly as they could have — because they had to deal with the fact the pool was never permitted.
"From the day I took the property and for the 74 days before the violation was fixed, I worked to get an architect to come in and take responsibility for the work on the pool. Once it was fixed and we had a permit, the inspector came out," he said. "The home has been remodeled. It looks great."
It's home renovation efforts like Hamro's that the Collier County Commission now is looking to reward.
Commissioners are expected in February to consider ways that county government can make it more advantageous for investors to purchase dilapidated properties and get code violations fixed.
Often, homes that need fixed up have code violations and county fines. Code Enforcement Director Diane Flagg is bringing recommendations to commissioners on how to address that.
Under the county's current policy, before a code enforcement lien settlement is offered to commissioners, the county staff takes into consideration the following:
■ The fine or lien amount is fixed and no longer accruing on a periodic basis.
■ The violations that resulted in fines have been corrected.
■ The history of violations involving the offending party.
■ For code enforcement liens and fines on a property that has new ownership, fines that accrued before the transfer of title would be considered for a waiver, provided the new owner diligently tried to fix the problems and code compliance was achieved.
■ The extent to which payment of the full lien amount would impose a severe financial hardship on the property owner. Fines accrued by an existing owner would be considered for a waiver, provided the existing owner pursued fixing the problems and compliance was achieved.
■ The amount recovered will equal or exceed the costs and expenses incurred by the county staff in prosecuting the violation and obtaining, recording and enforcing the fine or lien.
Under the proposal, Flagg said, investors and new property owners would have to fix the properties in a timely manner.
"Additionally, it is our understanding that they utilize the known fine amounts and lien, before purchase, to negotiate a lower price," Flagg wrote in an email.
Under current policy, Flagg said, when an owner requests a payoff, the county staff provides the property owner with information about the liens on the property and the code case.
"There is no way a buyer can avoid a penalty," Commissioner Fred Coyle said. "They don't own it until the ownership is transferred. They can't do work until they own it. And, if there is an issue like a swimming pool, there is no way they can do it without incurring a penalty."
"If you as an investor ... see that there are fines accruing, how much per day, once you come into compliance, the fines will cease. What the majority of investors do, they come in and see what the issues are and when they bid on the property, they take that into consideration," Flagg said.
Commissioners are required to vote to formally release all liens, excluding those that have been fully paid. Since May 2009, more than $8.5 million in fines and lien amounts have been waived by commissioners, Flagg said.
Commissioners asked county staff to come up with a new proposal after Hamro's company asked for a waiver of $19,400.11 in liens and code fines on the Golden Gate property, which S&W Partners purchased at a foreclosure auction in August.
Commissioners voted 3-2 to accept S&W Partners' offer to pay $2,500 to settle the issue, which would cover the county's administrative costs. Commissioners Donna Fiala and Jim Coletta were the dissenters.
Commissioners then agreed to ask Flagg to bring back suggested new rules.
"There should be some consideration to the new owner to correct the problem," Commissioner Tom Henning said. "That should be the direction for staff to bring back something."
Henry Johnson, an attorney for S&W Partners, said immediately after the Aug. 9 purchase of the Golden Gate home that the buyer moved forward to fix five violations left by the previous owner. These were removal of a fence, removal of a barbecue pit and removal of two sheds. There also was the unpermitted pool, which was more difficult to address because the pool contractor was out of business, Johnson said.
In this case, Flagg noted, S&W Partners didn't submit a payoff request to the Code Enforcement Department, which identifies the amount of fines, until after the property was purchased at a foreclosure auction.
The investors were able to fix every problem by Oct. 13, less than three months after they took possession of the property.
"We did this as quickly as we could. When we asked for the payoff information, it was somewhere near $15,000, which was a whole new ball game for this investment, especially because we worked so diligently to solve the problem," Hamro said.
"If I would have to pay more, I would not buy another property, if this is how investors are treated," he said. "You have banks that buy these properties and let them sit without making improvements."
Hamro noted that he couldn't make property improvements until he had the title.
Commission Chairman Fred Coyle said investors are stuck.
"There is no way a buyer can avoid a penalty," he said. "They don't own it until the ownership is transferred. They can't do work until they own it. And, if there is an issue like a swimming pool, there is no way they can do it without incurring a penalty."
The new policy is scheduled to be reviewed at the Feb. 14 commission meeting.