Originally published March 8, 2019 at 08:16p.m., updated March 12, 2019 at 09:45p.m.
Sunlight streamed into Judge Colleen Sterne's courtroom as attorneys gathered for convicted slumlord Dario Pini's monthly compliance report, a stark contrast to the early morning downpours of February 2 that flooded two of Pini's properties. Five of his units on West Valerio and three at West Cota developed serious mold. Wet-couch-stuck-to-the-wall mold, said the court-ordered property manager. Then a third building was affected. When the mold tested toxic, the manager, Nancy Daniels, moved about 40 tenants to Motel 6 at a cost of roughly $4,000 per day. Most were re-housed in a different apartment, but it may be late March before walls in the ruined flats are repaired. Ripping out drywall and motel bills cost $283,000. Putting the walls back will cost even more.
Ever since Judge Colleen Sterne assigned William Hoffman the responsibility for upgrading eight of Dario Pini's properties to code standards — and collecting the rents on them — an aggrieved Pini and his dogged attorney Paul Burns have counted the pennies being spent. Burns frequently complains Hoffman has "burned through" the $1.5 million or so Pini has had to hand over in rent, and of Hoffman's fee and costs that Pini must pay. But the nearly $300,000 price tag shocked even the court. Sterne alternately praised Hoffman's team for swiftly re-housing the tenants and berated them for not telling anyone until a month had passed. When the properties ran out of cash, Hoffman put it on his corporate credit card.
Of the 75 apartments embroiled in the receivership, 13 are vacant; another 21 tenants are under eviction notice. The $166,800 in total rents reported by Hoffman last April has dipped only to $145,000 per his March report. Of the approximately $1.5 million collected in rents, about $1.3 million appears to have been spent: Utility payments and maintenance costs consume thousands every month at the seven rental properties, and the employees who pay bills and do maintenance cost somewhat less.
Hoffman has billed $600,000 in fees altogether, but with the litigation Pini frequently commences, tens of thousands more have gone to Hoffman's attorney. Last November, his legal fees rose over $20,000; the billing wasn't specified, but in the months before, Hoffman had had to petition the court repeatedly to get funding from Pini and his lenders to fix the violations underlying the case. He's had to defend himself against a personal suit and attempts to replace him brought by Pini. The additional costs to fumigate the properties for vermin and to house tenants in motels have for the most part been paid by the property lenders; Hoffman has had to bring motions to get each bit of money.
Hoffman is squarely in the middle of an epic 25-year battle between the City of Santa Barbara and Dario Pini, who owns more than 95 properties in the city. Pini has succeeded in outmaneuvering the city and its inspectors for decades, an agility perceptible at the receiver hearings since last spring. City Attorney Ariel Calonne had succeeded last April in getting Hoffman appointed to handle the worst properties, after a protracted trial presided over by Judge Sterne. She determined the abject condition of the properties posed a significant health threat. A receivership like this one, imposed for Health & Safety Code reasons, means tenants get relocation benefits.
Hoffman, a 40-year veteran in the field, is accustomed to evicting tenants when extensive repairs mean an apartment must be emptied. It's clear that Hoffman has been feeling his way through the new relocation practice. In court on Friday, arguments ensued over relocation costs: Who was a tenant versus a casual lodger under the Health & Safety language? Should tenants get a 60-day eviction? Or was that neither just nor fair?
Ultimately, Judge Sterne ordered Daniels to compile by next Friday a tenant report to determine who could receive relocation compensation. She similarly ordered Daniels to inform the tenants on this Friday that they could not continue to live at Motel 6 and to start making plans for other housing. Sterne stated, "We cannot put the receivership estate in charge of finding housing for all the tenants and send all the properties into the red with tenant issues."
Six other properties are in the receivership, and Nancy Daniels, who has handled many for Hoffman, said more than once that the city's permit process was unduly complicated. She'd had three meetings with the city on the Mission Street property, the first to undergo re-construction; only recently had she learned full architectural drawings were needed. Pini has always objected that a receiver from San Diego was appointed, and this was an "I told you so" moment for Burns.
The warring sides struggled through the other five properties; the sunlight left the courtroom as noon approached. On Los Aguajes, the construction bid is almost final, which prompted Burns to protest that only one bid was made and the same builder was being used on three properties. Fernando Landa, Hoffman's attorney, said 75 contractors had been asked to bid on the properties. Matthew Moriarity, attorney for lender U.S. Bank, jumped in, tired of being quiet, saying this had "worn on so long." The lender was ready to pay the contractor if Pini wouldn't. "He shouldn't be able to stop the receiver's progress every step of the way," Moriarity said.
Sterne told Hoffman to get multiple bids, including from Pini's suggested contractors. It was a matter of good faith to try, she said, though she couldn't stifle a rueful laugh as she said it.
This story was corrected as the tenant relocation cost per day seems to be $4,000, rather than $6,000 originally reported. On March 12, this story was updated with information on costs.