His apartments were run down. Now Summerset owner ordered to pay $200,000 in fines

The owner of Summerset Village Apartments, where approximately 1,000 residents went weeks without heat and hot water last November, was ordered Monday to pay more than $200,000 to the city of Fresno for code violations.

An administrative hearing officer released his 41-page decision regarding the appeal of fines levied against Chris Henry, an out-of-town owner who was thrust into the spotlight last year as Fresno’s most prominent negligent property owner. Henry is a Kern County oil company owner and restaurateur in the Bay Area and Santa Barbara. Henry can appeal the officer’s ruling.

Henry tried unsuccessfully to repair old, leaky gas lines at Summerset, but Pacific Gas & Electric Co. shut off service Nov. 12 because of safety concerns. A week passed before city officials were notified of the gas outage.

The crisis spurred Mayor Ashley Swearengin to declare a state of emergency while crews worked to restore services to the low-income residents, many of whom are Southeast Asian refugees. About 150 current and former tenants are named in a lawsuit against Henry, which seeks $3 million and includes a wrongful-death claim on behalf of the family of Her Xa Lor, 78, who died Jan. 2 of respiratory failure and pneumonia.

Code officers inspected the 220-unit complex and found 1,450 violations. The city slapped Henry with a bill for $290,000 in fines (at $200 each), due Jan 6. He appealed.

Hearing officer Michael Flores upheld 872 of the violations, which amounts to at least $174,400 in fines, plus more than $30,000 in administrative costs for inspecting the complex.

“The decision goes a long way to remedy the violations and bring some resolution to this tragic event,” Swearengin said. “Since the Summerset incident, the city has taken some major steps forward to hold negligent property owners responsible and prevent future ‘Summersets’ from happening in the first place.”

Henry can appeal Flores’ decision within 90 days to the Fresno County Superior Court, but his attorney Stephanie Borchers said she doesn’t know yet whether he will pursue that option. Borchers said she was pleased some of the violations were dismissed, but also finds the decision frustrating because the city should want to work with landowners to improve low-income properties.

“It’s pretty rare that a property owner in this sort of situation acknowledges that there have been problems with the property, accepts responsibility for the property, and not only steps up to correct every single violation that the city has found and then some, but also puts much much more into the property for the benefit of the people living there,” she said. “I think the city and we as a community want to encourage that and not penalize it.”

Debating the damage

The case boiled down to 126 violations that Henry disputed – like missing window screens, cracked windows and exterior termite damage – that the city deemed “immediate danger.” That determination requires repairs to be done promptly. Flores upheld 60 violations, including damaged windows and front doors, but dismissed 66 others.

Henry’s attorney argued that the city’s citations were issued in violation of state code, which requires the city to allow a reasonable period of time for problems to be fixed unless they pose an immediate danger to public health and safety. By not providing proper notice, he argued that the city’s fines were punitive and should be waived.

The city admitted some of the violations may not be considered an immediate danger when analyzed in isolation, but when “taken as a whole,” they satisfied those requirements.

The Fresno City Council chamber was packed for the hearing in September. Summerset residents held signs in a demonstration over the conditions they endured. One read, “Don’t forget what we suffered.”

Borchers said Henry spent $1.6 million on repairs and renovations to the property, in part because he had a verbal agreement with the city to waive the fines if the money was put into repairs that went above and beyond what was required.

Brad Hardie, president of Regency Property Management who was hired by Henry to oversee repairs, testified that his boss agreed to stucco instead of just paint the building exteriors, with the understanding of that agreement.

Deputy City Attorney Chad Snyder said the city manager can waive up to $100,000 in fines, but any agreement beyond that would require a written contract approved by the City Council, which did not happen in this case. The city also argued that any offer related to the fines dealt only with the possibility of no further fines being assessed, should Henry make steady progress on the repairs.

Flores said Henry failed to prove that the city made a “clear and unambiguous” promise to waive the fines and, even if the city had made that promise, Henry did not “detrimentally” rely on it.

Henry’s attorney argued he would suffer if forced to pay the $290,000 because the money spent on repairs could have been used more cost effectively or made him more money if invested in something else.

Flores said Henry “provides no evidence to support this argument, and without evidence to the contrary, it would be reasonable to believe that the property’s dollar value would increase by at least a small amount or, in the alternative, not lose value.”

City documents for the complex at 2103 N. Angus St. showed 19 fires since 2000 and seven code enforcement cases in the 28 months leading to the gas outage. They include reports of broken sewer lines, insect infestation and leaky pipes causing mold. The files showed that inspectors in one case didn’t return to see whether repairs were completed, and all the cases were closed without billing Henry.

The crisis at Summerset prompted The Bee to investigate substandard housing issues all over the city in a series called “Living in Misery.”

This story was originally published October 31, 2016 at 4:35 PM with the headline "His apartments were run down. Now Summerset owner ordered to pay $200,000 in fines."