Dario Pini

Paul Wellman (file)

Dario Pini

Both Sides Draw Blood in Dario Pini Trial

City Hall Clashes with Landlord Attorneys over Receivership

Both sides managed to draw blood in what promises to be a protracted courtroom showdown that started this week between Santa Barbara City Hall and landlord Dario Pini over chronic housing habitability issues dating back more than 30 years. Both sides agreed that Judge Colleen Sterne needs to appoint a receiver to take control over some Pini properties to make the health and safety code repairs that Pini hasn’t; however, both disagreed over who the receiver should be and how many properties — City Hall says 11; Pini insists seven — should be placed under its control.

Pini, who owns 95 rental properties within city limits, and the banks that lent him money are urging that Judge Sterne appoint William J. Hoffman as receiver, citing Hoffman’s 40 years of experience as a professional receiver in 50 states during which time he’s taken financial control over 2,500 financially troubled properties in 900 separate receivership actions. Receivers are empowered by the court to collect rents and take out loans, if need be, to make repairs, short-stopping the owners and in some cases the lenders themselves. Attorneys hired by City Hall scored the most damage against Hoffman on the always raw question of tenant relocation. For tenants whose names are not on the lease, Hoffman testified, no relocation assistance would be required. For Pini, famous for overcrowding his dwelling units, that’s a large number of tenants. Hoffman testified that if he found eight tenants occupying one of Pini’s one-bedroom units, he would not feel obligated to relocate all of them, should that be necessary to make repairs. “They’re not all tenants in my view,” he said. “If they don’t belong there, they’re not tenants, then we’d have to evict them.”

That’s exactly the sort of mass dislocation City Attorney Ariel Calonne says he’s most anxious to avoid. That’s why he’s pushing Judge Sterne to appoint Rob Fredericks and the Housing Authority of the City of Santa Barbara instead. Fredericks testified he’d feel obligated to relocate any tenants who might be displaced by repairs. He could not compete with Hoffman, however, when it came to professional experience. Fredericks has never served as a receiver, a fact that attorneys for Pini and the banks stressed repeatedly. Fredericks said the Housing Authority, which owns 1,200 rental units and provides vouchers for 2,300 tenants, knows the functions a receiver performs on a daily basis — collecting rents, making repairs, managing large rehab efforts. “It’s what we do,” he said.

Pini and the banks oppose Fredericks’ appointment, claiming the Housing Authority can’t act independently because it’s an arm of City Hall. Frederick was forced to acknowledge under questioning that the Housing Authority’s own website describes itself as “an arm of the city” and that members of the Housing Authority board are all appointed by the Santa Barbara mayor and City Council.

Judge Sterne, rather than cut the baby in half, opted to create a Siamese twin. She urged attorneys for both sides to figure out a way for Hoffman to hire the Housing Authority to help handle whatever receivership duties she orders. Hoffman, she opined, was the only candidate she would consider given his depth of experience. The Housing Authority, she added, appeared to have a conflict. But, she also noted, the Housing Authority had a depth of connection to the Santa Barbara community that would help greatly with tenant relocations. She also noted the agency’s track record doing major housing rehab work at reasonable cost.

The trial is expected to continue through the end of this week and into next.

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