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Realtors Win Big in Showdown over Inspection Reports

Santa Barbara City Council Votes 5-2 to Immediately Suspend Zoning Inspection Reports

Led by Thomas Schultheis and Bob Hart (center), real-estate-industry advocates posed outside City Hall after a victorious council vote. | Credit: Paul Wellman

The Realtors showed up in Santa Barbara’s City Council chambers this Tuesday armed with double the petition signatures needed to qualify a ballot measure for this fall’s election that would eliminate the controversial Zoning Inspection Report (ZIR), which even its supporters admit is seriously flawed. On the other side sat City Attorney Ariel Calonne ​— ​nursing an ailing Achilles tendon ​— ​who insisted the Realtors’ measure could not withstand legal challenge. The city’s General Plan, he stated, specifically requires ZIRs whenever residential properties are sold. He described the initiative as a legal “nullity.” But with Mayor Cathy Murillo the only councilmember actually supporting the ZIRs, the apparent stand-off proved more smoke than actual fire.

The council was in the mood for a compromise that would leave the program standing, but in name only. That would satisfy the legal concerns that Calonne had warned about while making the Realtors’ threat of a special ballot election — which would have cost City Hall $200,000 — go away. Four years ago the Grand Jury issued a scathing report against ZIRs, and Realtors have long been outraged over them. Councilmembers Randy Rowse and Meagan Harmon, it turned out, had recently burnt up their cell phones trying to craft a compromise the Realtors could live with. They succeeded. The deal sailed through on a 5-2 vote, with Murillo and Sneddon opposing.

The Realtors have agreed to keep their initiative off the November ballot ​— ​which will save the city $200,000 in election costs. In exchange, the council agreed to suspend the ZIR program immediately, meaning no more on-site inspections. (As a practical matter, those inspections had already ceased in the wake of a lawsuit filed by the Association of Realtors and backed by the Pacific Legal Foundation. Though that lawsuit ultimately failed, it inspired significant changes; inspections took place strictly on a “drive-by” basis.) Under the new deal, the only information provided to prospective buyers will be what’s in the street file and can already be read by anyone with access to the city’s online property registry.

In any given year, 500 to 700 properties are sold within city limits that had required Zoning Inspection Reports. About 2 to 4 percent of the reports might red-flag zoning problems, such as more kitchens or bathrooms than the zoning allows, not enough off-street parking, hedges higher than code calls for, or encroachments into setbacks that must be remedied. The ZIRs were started in 1974 as a crowbar to exact compliance with zoning laws, protect would-be buyers, and maintain the integrity of neighborhood character. But the reports are only as good as the inspectors involved and as solid as the files with which they worked. Problems missed during successive inspections have been “suddenly” discovered, Realtors complain, leaving prospective buyers and sellers responsible for fixing expensive discrepancies they never knew existed. Deals have fallen out of escrow, and much aggravation needlessly inflicted.

City Attorney Calonne acknowledged such frailties as “human error.” Thomas Schultheis, spokesperson for the Realtors, said the immediate suspension of the program would  “eliminate the human element.”  

Five years ago, the Realtors, led by Bob Hart, began the charge to repeal the ZIRs and almost succeeded. (Hart would initiate the recent lawsuit as well, and it was he who sparked the signature drive.) The Grand Jury found that the reports were unreliable and inconsistent. The council responded by promising a host of administrative reforms. “We never got it done,” stated Councilmember Randy Rowse, whose change of heart on the reports helped sway many of his fellow councilmembers. “It’s a worthless tool,” he said in an interview before the meeting. “For all the pain and misery it’s caused, it wasn’t consistent.”

In the meantime, the council voted to initiate amendments to the city’s general plan and zoning rules that will allow the ZIRs to exist, if only by name, thus satisfying the letter of the law but altering its spirit. Councilmember Kristen Sneddon ​— ​no fan of the ZIRs herself ​— ​objected to the lack of public process and expressed concern she’d been apprised of the details of the deal only an hour before Tuesday’s council meeting started. The proposal will now be referred to the Planning Commission, but only for their recommendation, not their approval. The Planning Commission, Sneddon was told, was the avenue for public input.  

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