Neighborhood Bully

Threats, fines and force: The city of Phoenix stops at nothing to revive a troubled community

The city of Phoenix called Steve Shepard a slumlord, raided his complex and charged him with hundreds of code violations at his west Phoenix property.

Earlier this month, after more than a year of haggling with the city, the former manager of Canyon Square Apartments, whose partners included the mayor of Beverly Hills and her husband, agreed to pay a $1.25 million fine.

You'd think that money would go to recoup what it cost taxpayers for city officials to carry out an extensive raid and argue the case for months in court. Maybe even to improve an apartment complex that was named last year as one of the Valley's 12 worst rental properties.

You'd be wrong.

Instead, only a fraction of that money will ever be used to better the Westwood community where Canyon Square is located. Under an extraordinary agreement with the city, Shepard can forgo most of the million-dollar fine by completing a series of highly unusual terms.

By apologizing to the Westwood Community Association, headed by activist Donna Neill, the city will knock $250,000 off the total. To offset that quarter-million, Shepard must say that he and his partners failed to renovate Canyon Square; that he feels remorse about the condition of the property; and that the property negatively affected the neighborhood.

By agreeing not to own, manage or hold a financial interest in any rental property in Arizona for three years, Shepard sidesteps another $270,000.

If he gives the city documents that officials could, in some cases, easily retrieve from public records, another $710,000 is forgiven. Those records include a list of the principal members of his company, Ontologics Capital LLC; a list of all rental properties he owns or holds an interest in; and proof that each property is properly registered per state law.

In fact, the only real benefit to the city or the Westwood area comes from $20,000 Shepard has agreed to pay to help build a community center at a local park, another pet project of Neill's. The city wanted Shepard to give the money directly to Neill, but he and his attorney insisted it be distributed through the city's park fund.

The Canyon Square fiasco is the latest in a string of much ballyhooed, but ultimately ineffective, enforcement actions in Westwood coordinated by the city through a pilot program called Rental Renaissance.

The program has done little besides draw criticism from property owners and managers for its heavy-handed, overzealous efforts since 1997.

Chief among the complaints is that city officials blindly sided with Neill and, as a result, allowed her to influence the city's scrutiny of specific rental properties.

But Neill hasn't acted alone.

A group of city officials -- including prosecutors, inspectors and employees of the Neighborhood Services Department -- has guided the Rental Renaissance effort.

Even City Councilman Phil Gordon, whose district includes Westwood, has been a vocal supporter of the pilot program as part of his get-tough campaign against slum properties. Gordon has worked closely for several years with Neill on neighborhood issues. And he helped create a task force with Maricopa County Attorney Rick Romley to target blighted rental properties, as well as their owners and managers.

New Times spent three months investigating citizen complaints about the city's involvement in implementing Rental Renaissance and how it later prosecuted people it deemed "slumlords." The paper looked at how Neill has gained prominence, both as a fund raiser for her own nonprofit community association and as a champion of the city's agenda ("Welcome to Donnawood," John W. Allman, November 15).

Through Rental Renaissance, city officials have:

• Conducted high-profile raids in an effort to pressure compliance from select properties.

• Threatened criminal charges, excessive fines and even jail sentences to gain cooperation.

• Attempted to solicit donations for a community project in return for reduced citations at one property.

• Forced property owners and managers to sign settlement agreements that required attendance at neighborhood meetings run by Neill and, in some cases, mandated contributions to Neill's pet projects and organizations.

For all its efforts, however, the city has gotten little in the way of results.

Some owners, citing a lack of cooperation from the city, have sold their properties, leaving Westwood before repairs were made. Some management companies now refuse to take contracts in the neighborhood.

Instead, bizarre deals, such as the apology to Neill, have been struck. In nearly all the cases examined by New Times, the city accepted agreements that allowed large fines to be offset in return for conditions that put no dollars into the city treasury and recouped none of the enforcement expenses.

Many of the settlement agreements in Westwood were facilitated by two assistant city prosecutors, Aaron Carreon-Ainsa and Jo Ellen McBride, who recently received the 2001 Maricopa County Bar Association's member of the year award.

City prosecutor Kerry G. Wangberg declined, through a city public information officer, two requests from New Times to interview his staff. One of the requests cited specific allegations against Carreon-Ainsa and McBride by property managers and owners.

Tammy Perkins, director of the Neighborhood Services Department, which oversees Rental Renaissance, says any improper action by her staff will be investigated. She says her employees work to foster relationships in all Phoenix communities, including Westwood.

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