Committee backs new penalties for stalled construction

Residents who take too long to remodel their Palo Alto homes, leaving sections of their blocks fenced off and mired in construction debris, are about to feel some financial pain.

The City Council’s Policy and Services Committee on Tuesday night unanimously supported a new law that creates an escalating schedule of fines for people whose building permit have expired. Once the City Council approves the law, which it expects to do in the coming weeks, failing to finish a residential project on time will become increasingly costly. While there would be no penalty for the first 30 days after expiration, there would be a penalty of $200 per day between the 31st and 60th day. The fine would rise to $400 between the 61st and 120th day and then to $800 per day after 121 days.

The law targets projects that have been stuck in construction mode for years, or in the case of one home on the 1600 block of Mariposa, for nearly a decade. The change had been proposed in a September memo by Vice Mayor Nancy Shepherd, Councilman Marc Berman and Councilwomen Karen Holman and Gail Price. The four council members noted in the memo that while there might be a variety of reasons for the construction snags, “the resulting incomplete construction project can become an eye-sore, attractive nuisance and a problem for the residents and neighborhood.”

“These incomplete projects detract from neighborhood quality of life and residents deserve an ordinance that they can rely on to ensure that housing projects start and finish in a reasonable amount of time,” the memo states.

In its discussion Tuesday night, the committee wholly backed this sentiment and even agreed to take the law one step further than staff had suggested. Under the staff proposal, a builder would be able to request extensions from the city’s chief building official once the 180-day life of the permit expires. The decision on whether and how many extensions to grant would be completely at the building official’s discretion.

The committee decided on Tuesday that this leaves things too open-ended and decreed that after two 180-day extensions, a builder would have to convince the City Council to grant the third one.

Homer Maiel, acting chief building official, said it’s not uncommon for a builder to request an one extension once the 180-day expires. These requests, he said, are “easy to deal with.” Subsequent extensions, he said, are uncommon and require a justification and an explanation in writing before it can be granted.

“We don’t give it away that easily,” Maiel told the committee. “They have to have good reasons, justified reasons, then we give them the third 180 days.”

But Holman and Councilman Larry Klein said the builder should be required to come before the council to receive anything beyond the two extensions. Holman said under the rule proposed by staff anyone can just come in and make any type of excuse for demanding an extension (she gave as a potential example, “I’m distraught because my dog got run over.”).

“What would be the basis for approving? What would be the basis of denying?” Holman asked, saying she was “disturbed” by the open-ended discretion. “This could just go on for years and we aren’t any better off than we are now.”

To remedy this situation, Holman and her committee colleagues Chair Liz Kniss and Price backed Klein’s proposal to get the City Council involved in approving any extension beyond the first two.

“Our bigger hammer is that this person has to persuade at least five City Council members (the majority of the nine-member council), not just one official,” Klein said.

Klein also directed the Office of City Attorney to explore whether the city could take more severe actions against residents whose construction stalls for years, potentially racking up millions in unpaid fines. This would include taking ownership of the house and potentially selling it through foreclosure.

Palo Alto’s proposed ordinance is modeled in some ways on similar laws in Atherton and San Bruno, each of which has fines for expired permits. Penalties in Atherton are based on the square footage of the project, while those in San Bruno are based on construction value.

In Palo Alto, officials decided to have flat fee for all projects, with some discretion to waive the fees as circumstances dictate.

“Staff felt that that was too much of a one-size-fits-all approach because individual projects, depending on where they’re sited or how complex they are, might take longer or might not cause a visual blight for neighbors,” Deputy City Attorney Albert Yang told the committee.

In most cases, the ordinance would force builders to speed up their projects or suffer a fine. When that’s not possible, they could be required to erect wooden fences around the stalled construction site under the new rule.

“It allows the chief building official to actually require a fence to be installed around a property in the event they don’t comply and close out the permit to ensure there isn’t a blight or visual impact to a public right of way,” said Peter Pirnejad, the city’s director of the Development Center.