Neighborhood Bully

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.

"We listen to residents and property owners. We help them develop an action plan. We partner with them with whatever tools we have available to help make that action plan become reality," Perkins says.

"We don't press our vision of what a community should look like."

And yet, in Westwood, that's exactly what appears to be happening.

Westwood has long been Phoenix's black sheep, a bleak icon in the city's 845 recognized neighborhoods.

The community, which covers nearly a mile between Indian School and Camelback roads, from 19th Avenue to Interstate 17, has had high crime, numerous blighted buildings and, until recently, few amenities. The neighborhood, since the year 2000, opened both Kid Street Park and a community literacy center.

Its population is made up mostly of rental property tenants, many of them minorities, who cannot afford housing in other neighborhoods. More than 20 languages are spoken in Westwood. More than 1,200 students fill the local Westwood Primary School.

After years of watching the neighborhood languish in disarray, the city in July 1997 finally got involved.

It used its Neighborhood Services Department, created in 1992 when the city consolidated all its neighborhood programs into a single unit, to spearhead a new program.

Rental Renaissance began with a series of rental property forums hosted by the city from January to March 1997. Attendees complained that crime, lax maintenance, trash and excessive traffic at area apartment buildings were helping to foster an unstable environment.

The city agreed to reallocate $135,000 from its federal Community Development Block Grant funds to form the pilot initiative. Rental Renaissance, in addition to adding new staff positions and paying for police officers to work overtime, created a team of city experts to work with community leaders, businesses and residents. Two neighborhoods were picked to test the program: Westwood and Palomino, a northeast Phoenix neighborhood between Bell Road and Greenway Parkway.

The goal, as stated in city documents, was to "promote healthy neighborhoods through sustainable solutions to problem rental properties."

Westwood's team included Pam Falco, a housing development specialist, who was hired by the city to lead the Rental Renaissance effort in that community. Helping her, among others, were prosecutor Aaron Carreon-Ainsa and Donna Neill, president of the Westwood Community Association.

The team, however, was vastly underqualified when it came to dealing with rental properties. They didn't understand the work involved in managing an apartment building, such as the difficulty managers have verifying tenant backgrounds or trying to make repairs when the money needed comes from an owner who often doesn't live in the same city, much less the same state.

Lisa Hubbard, a neighborhood specialist who became Westwood's team leader after Falco left the city in 2000, said the learning curve was significant.

"The most experience some [team members] had had was renting an apartment," Hubbard says.

Tim Boling, deputy director of Neighborhood Services' Neighborhood Coordination Division, says education was gained by "putting on your boots and going out into the neighborhood."

"Their experience has continued to increase," he says of the team. "Their knowledge has continued to increase."

By December 1997, the city's effort in Westwood had generated more than 2,200 code enforcement citations at three "identified" properties. And the law department was assisting management and owners in becoming "contributing members of the community," according to city documents.

But the program had hit its first snag.

One of the "identified" properties -- Sundowner Apartments -- was causing a problem. Property managers and owners there refused to cooperate with the city's demands, and the first flaws in the pilot program were revealed.

Sundowner Apartments had been a staple in Westwood since the early 1970s; its buildings stretched north along North 23rd Avenue from Campbell to Hazelwood streets.

There had been maintenance problems at the 156-unit complex in the past. Police calls for service. Complaints.

But on July 1, 1997, when more than 60 police and city inspectors descended on the property, it was unlike anything that had occurred before. The cops and officials established a makeshift command center across the street. Media gathered. And the entourage went unit by unit, rousting residents from their homes while they searched for flaws.

Boling says the city doesn't like to call such events a "raid." Instead, he says, "it's a coordinated code enforcement activity."

Whatever its designation, the effect was the same: Sundowner received 513 citations in a single day.

But less than a year later, Sundowner Investors, the property's out-of-state owners, would settle the city's claim by admitting fault to just four citations, which primarily dealt with plumbing problems such as a leaking faucet. The majority of other citations were either repaired or dismissed in court.

How had such a high-profile, well-coordinated raid produced such few results?

According to Andrew Cohn, who managed the property in 1997 for Arcadia Asset Management Company, the entire event was a sham designed to hype a burgeoning city crackdown on slum properties and possibly draw dollars for a planned community project.

The majority of citations involved tenant-related problems, Cohn says, such as holes inside units that tenants admitted to inspectors having caused when they punched a wall.

"Were there leaky faucets? Absolutely. At some point, I'm sure there was," Cohn says. "Was it the picture they painted? No."

Cohn says the property was raided because the city hoped to solicit money for a planned community park, which was to be built directly across the street.

The city had bought the land in 1996 at the urging of activist Neill, whose community association was busy soliciting donations to help build the park.

"Aaron made it very clear that he felt the owners of Sundowner were wealthy. We were told this whole thing could resolve itself if we participated in the park," Cohn says. "They tried to build into the settlement agreement a donation for the park. The owners flatly said, 'We are not underwriting, through coercion, this park.'"

According to Boling, the city prosecutor's office has the right to negotiate settlement agreements as it sees fit. He declined to speak for the prosecutor's office as to how negotiations typically proceed.

The city prosecutor's office declined to allow Carreon-Ainsa to be interviewed.

Sundowner's settlement agreement differs greatly from similar agreements signed by other property owners in Westwood. Sundowner Investors refused to agree to a clause binding the terms of the agreement to any future owner. The company refused to pay a sanction; instead, it agreed to spend $10,000 on exterior lighting, an improvement that had already been planned, according to Cohn. Sundowner asked that the city add a stipulation to the agreement requiring an inspection of each unit every six months to ensure no additional raids would occur.

"We frustrated the shit out of them because we raised our hand and said, 'No,'" Cohn says. "Sundowner could have signed any settlement agreement and left."

The city agreed to the terms, even though city records show Carreon-Ainsa had been pushing for a settlement payout in excess of $120,000.

"They knew they had nothing. They had no choice," Cohn says. "If it was so bad, if Sundowner was so bad, if the people were so bad, why would they have agreed to this settlement?"

The Rental Renaissance team, barely out of the gate with its pilot program, was already on the ropes.

Sundowner, and other Westwood properties, however, had not seen the last of the city's team.

By 1998, Councilman Gordon was gaining publicity for a joint effort he launched with Maricopa County Attorney Romley. The county's Slumlord Task Force was making headlines with its "Terrible 20" list of Phoenix's worst rental properties.

Propelled by a news series in the Arizona Republic about substandard rentals, Gordon and Romley had rallied behind an effort to identify and improve blighted properties. One of the main targets was Valley landlord Sherwin Seyrafi, who owned about 40 rental properties. Seyrafi later went to federal prison on bankruptcy charges.

The task force gave Gordon a launching pad to criticize rental properties in his district, of which Westwood had the most. Momentum continued into 1999 when the state Legislature passed a new statute that required rental-property owners to register with the city, increased the penalties for noncompliant owners and provided local government with more tools to cite owners whose properties were used for criminal activity.

The slumlord effort brought pressure to Gordon's already full plate.

"My pressure," Gordon says, "self-pressure. I swore that I wasn't going to do it for political reasons, get a headline" and go away.

But Gordon got his headlines anyway.

By mid-1999, the Rental Renaissance team was making headway in Westwood, racking up citations and forcing property owners, many of them out of state, to sign settlement agreements.

One of the first enforcement efforts that year occurred at Indian Manor, a 31-unit complex on West Heatherbrae Drive. Inspectors cited the property for numerous violations, including multiple citations for each instance of trash, dog feces and improper storage on the grounds.

Indian Manor's owner, who lived in Utah, and its local management company were eventually forced to sell the property and abandon Westwood.

But when the original complaints were issued, Indian Manor's owner applied for an interest-free "rental rehabilitation" loan from the city, which would have provided up to $250,000 to make repairs. Then, without warning, the city took the owners to court, filing civil charges against the apartment complex.

Rental rehabilitation loans are forgiven after 10 years, as long as no future violations occur. Indian Manor's owner and property manager worried about having to repay the loan if they received the money and then were cited again without warning.

The property owner consulted a Phoenix nonprofit agency called Partners in Action about buying Indian Manor, and the city agreed to significantly increase the rehabilitation loan amount to $475,000 to assist the nonprofit's purchase.

A city settlement agreement, signed by the owner, included a $20,000 payment to Partners in Action, further upping the amount of money received by the nonprofit to cover needed repairs.

Rental rehabilitation loans are allocated through federal CDBG grant monies from the Department of Housing and Urban Development. The loans typically do not exceed $250,000, according to Neighborhood Services officials. In the case of Partners in Action, the city says it saw an opportunity to improve a blighted property.

"It had to do with the benefits we believed we could get," says Kate Krietor, housing development manager for Neighborhood Services. "At a lesser amount, it wouldn't have worked."

Boling disputes the notion that the city's actions forced a property owner or management company to leave Westwood.

"To point the finger at the city and say we forced somebody out, I don't think is fair," he says. "You have to look at how they maintained the property before we even came around."

Erynn Crowley, interim deputy director for Neighborhood Services' Neighborhood Preservation department, says the city doesn't like to have property owners abandon their efforts before repairs are completed. She says most cases are resolved without using the threat of legal action.

"We don't take the majority of our cases through the legal process," Crowley says. "The majority are resolved at some point in the code enforcement process [through] voluntary compliance."

And, in some cases, a combination of the two occurs.

In August 1999, the city hit Canterbury Apartments and Villa de Ninas, two adjacent complexes managed by David Chamberlin.

Chamberlin remembers the day vividly when the city arrived at Canterbury. He was conducting a meeting, when he looked up to see Phoenix police, city inspectors, Jo Ellen McBride and Donna Neill scouring the grounds.

"We always thought we were a pretty good management company," Chamberlin says today.

The citations levied against his properties included repairs that shouldn't have taken much time to fix. Chamberlin says some complaints, however, were questionable, such as a citation for exposed wiring. The wire was attached to an underground circuit for the pool lights and was buried in dirt. After repeated attempts to locate the exposed wiring, Chamberlin says he finally called the city inspector, who came to his property and kicked over a mound of dirt to show what she had cited.

"If it's a violation, it's a violation," says Crowley. "Our goal is not to cause anyone frustration. Our goal is to bring a property into compliance."

But the city seemed to want more than just the repairs made.

Chamberlin says he was told he had "the worst property on the street," that he was "harboring drug lords," that the ownership and management were "awful."

There were threats of jail sentences and fines. Members of the Rental Renaissance team brought up what it believed were a large number of police calls to the properties. Chamberlin says the total included repeat calls from different residents on individual incidents.

They "make it very clear, they will take everything you've got," Chamberlin says. "They will take your building."

What worried him the most was a particular threat from McBride that Municipal Court Judge Deborah Griffith was on the city's team.

"The insinuation was, 'You're done. You have no hope,'" Chamberlin says. "It's wrong."

The city prosecutor's office declined to allow New Times to interview McBride, who replaced Carreon-Ainsa as the Rental Renaissance team's legal member.

Griffith, who spent four years from 1997 until 2001 as a civil hearing officer, was sworn in as a judge with the criminal division in April.

In civil court, Griffith heard cases involving the city's Neighborhood Preservation ordinance and civil zoning matters. Some of the cases she presided over involved Westwood properties.

"I'm not nor have I ever been a member of any team," Griffith says. "As a judge, I am independent, and I am fair and impartial."

The city's pressure worked at Canterbury and Villa de Ninas. A settlement agreement was signed, but tension developed between Chamberlin and his property owner. Chamberlin eventually was released from his contract managing both properties.

Because he was named in the city's settlement agreement, however, Chamberlin still had to abide by its terms.

One of those terms was that he attend meetings of the Westwood Community Association and Westwood Business Alliance, two groups created by Neill.

Those meetings consist of Neill talking about neighborhood issues and asking for donations to pay for her various projects.

"It was a waste of my time," Chamberlin says.

Chamberlin doesn't blame the city's vision. He blames individuals, such as McBride and Neill, whom he says seem to enjoy wielding the power they have been given.

Neill, in interviews with New Times, describes the authority that neighborhood residents have been given by the city.

"I think the community directs a lot of what's going on," she said during a September tour of Westwood to look at improvements made by the Rental Renaissance effort.

Neill spoke candidly during the tour about certain properties where the city has taken action. Even some apartment complexes where renovations have occurred didn't seem to pass muster with Neill.

"I kind of refer to these places as putting clean clothes on a dirty body," she said. "It still stinks."

Chamberlin says the attitude must change before the neighborhood can improve.

"There needs to be a spirit of cooperation between that program [Rental Renaissance] and the owners," Chamberlin says. "The city needs to make more of an effort."

Chamberlin no longer manages property in Westwood, but he still has contracts in Phoenix. He hasn't had a problem with the city since 1999; however, this is the first time he has talked publicly about his experience.

"The retaliation from them will be an interesting footnote to your story six months from today," he says.

As properties were being raided throughout the neighborhood, the city considered a companion program to assist Westwood and Rental Renaissance.

At the heart of the discussion was Gordon, who wanted to create a corporation similar to the Downtown Phoenix Partnership, which had been formed to revitalize the city's lagging urban core.

It was called the Community Covenant Corporation No. 1, an auspicious title given that Gordon envisioned the group birthing subsequent endeavors in other neighborhoods.

Funded by a $90,000 city grant, the fledgling corporation hired John Augustyn, a 24-year veteran of the Phoenix Police Department, to serve as its executive director. Augustyn knew the system well, having served with the downtown partnership.

Community Covenant was incorporated as a nonprofit agency with a six-member board of directors, including community residents, Westwood business owners and other individuals familiar with redevelopment. Its goal was simple: Work within Westwood and the adjacent Simpson neighborhood to address blight, security, urban design and transportation.

But accomplishing its goal would prove tough: Augustyn was faced with pulling together private investments to make the corporation a thriving entity, free of city support. He moved into a cubicle at Rusty Childress' Buick-Kia car dealership in Westwood and went to work.

Augustyn heard about the Rental Renaissance pilot program and attended some of the team meetings. He met with Neill. And he began to understand how difficult his task might be.

"The whole format is the 'neighborhood' is supposed to have input in the direction the city is taking," Augustyn says. "In the case of Westwood, the neighborhood is Donna Neill."

Augustyn saw two players emerge: the city, in the form of Rental Renaissance team members, and Neill.

"Donna tells the city what she perceives to be the problem. Then the city focuses on [those] properties deserving of some special attention," he says.

Augustyn also went to monthly property manager meetings, which were led by Neill and city staff. The bulk of the properties represented had signed settlement agreements with the city that mandated their attendance.

"They're forced to [attend] by the prosecutor," Augustyn says.

His comfort level further dropped after learning some properties, per their settlement agreements, were being made to donate money to Westwood organizations, including Neill's community association. He talked to other people who had given Neill money. Neill even showed him checks she had received from Westwood businesses to fund events.

The recent New Times examination of Neill's community association, as well as two other organizations she has helped create, found that more than $600,000 in private donations and city, county and state grants have not been reported since 1996. As a nonprofit, tax-exempt charitable agency recognized by the Internal Revenue Service, Neill is required to report all such donations and grants to the IRS.

Neill, who was interviewed three times by New Times over a two-month period, becomes defensive when questions are raised about her financial accountability.

She attributes complaints and the newspaper report to a few critics she says want to see her efforts fail. She says Augustyn is one of her chief critics.

By May 2000, the Community Covenant Corporation reached a crossroads. Neill and Augustyn were not working well together. They eventually wound up in Gordon's office.

Gordon talked to them both, but stopped short of making any demands on either Neill or Augustyn.

Gordon admits there were "personality differences," but he says he "consciously decided not to get involved in the day-to-day activities or take it over or impose my will."

"I think we, for a while, Band-Aided. There was some progress, at least perceived progress," Gordon says. "But that didn't last."

Neill agreed to try to cooperate, and for two months things seemed smooth, Augustyn says. In August 2000, however, he says Neill again refused to work with him. This time, he didn't try to fix the problem.

Augustyn had heard from real estate experts who, he says, told him no one wanted to buy property in Westwood because of the city's enforcement effort. The city's staff also was in flux with the departure of both its Neighborhood Services director, who would be replaced by Perkins, and Pam Falco, the first Westwood Rental Renaissance team leader. Community Covenant board members seemed disheartened. Gordon had essentially given up.

Augustyn, fed up with Neill and worried about the direction of the group, resigned in November 2000.

"I didn't want to spend another penny of taxpayer funds on a program that would not work," he says. "Without the cooperation of the Westwood Community Association, I could not work to revitalize that community."

According to Gordon, the failed corporation was allowed to dissolve.

"I was disappointed," Gordon says.

Augustyn wasn't disappointed, just disillusioned.

"The city to a degree created this monster," he says today of the Rental Renaissance effort. "I don't know if they tried to control it."

Of all the apartment complexes in Westwood, none has caused the city more grief than Canyon Square, a 156-unit development that overlooks I-17.

And no property better represents how far the city was willing to go to change the neighborhood.

When Steve Shepard first was approached by the Rental Renaissance team about the complex, the city seemed determined to work with a new owner to renovate the property.

And Shepard seemed a good choice. His company, Ontologics Capital LLC, managed more units in the neighborhood than any other company. He had a solid record with the city, having successfully brought two other Westwood apartment complexes -- Wood Glen and Promenade -- into compliance with city code.

His wife, Alisa, and his property supervisor, Adrienne Switzer, were regular attendees of Neill's monthly community meetings. They worked with police to keep crime down. They didn't cause problems.

In early 1999, Falco took Shepard and Switzer on a tour of the complex, then called Canyon Park. She talked up the potential for the property and said the city desperately wanted to see it restored.

"She was trying to talk him into buying the property," says Switzer. "They believed he could get that property up to the standards they would like to see."

Falco, who also served as the city's Rental Rehabilitation loan processor, told Shepard about money he could receive. She promised him up to $250,000 in "rental rehabilitation" loans to assist with repairs.

"The whole reason they bought the property was because Pam basically told them they were going to get this money in the first few months to repair what needed to be repaired," Switzer says. "That was one of the deciding factors they took into consideration when buying it."

The only catch was that the money wouldn't be available until the property was purchased. On July 1, 1999, with the backing of his business partners in California, Shepard took over the building and renamed it Canyon Square.

Immediately, there were problems. Switzer says the apartment building was in much greater disrepair than Shepard had been led to believe. The cooling unit was failing. There were more vacant apartments than had been acknowledged. Money to make fixes was scarce.

Shepard called for a Rental Rehab loan application. Falco's news wasn't good. The city didn't have any money.

"They told him the money had already been allocated," Switzer says. "That the program was exhausted. [There was] no money available."

City records show that from 1999 to 2001, nearly $2 million in Rental Rehab loans were allocated.

Falco left the city shortly after March 2000 to take another job. She has since left Phoenix, according to city officials. New Times could not locate Falco for comment.

Her boss, Kate Krietor, says she never heard Falco say that a Rental Rehab loan had been promised to Canyon Square.

Rental Rehab loans, according to Krietor, are allocated on a first-come, first-served basis. The money, which equals about $1 million a year, is available to numerous neighborhoods, including Westwood.

Money was just one of Shepard's problems. Canyon Square was about to attract a lot of attention. And, as a result, so did his other properties.

On January 29, 2000, the Rental Renaissance team convened a meeting at City Hall to discuss each of Shepard's properties. Team members met his wife, Alisa, who was in charge of facilitating repairs at Canyon Square, and his out-of-state business partners -- Beverly Hills Mayor Vicki Reynolds and her husband, Murray Pepper.

The meeting, according to city records, included an overview of problem areas by Jo Ellen McBride, a status update on each property by Lisa Hubbard, an explanation of goals the city wanted to see implemented and a community perspective from Donna Neill. In most cases, the city agreed to give Shepard and his partners until March 31 to make changes. Until that point, Canyon Square was barred from renting any vacant apartment units.

In February 2000, Reynolds and Pepper met with Gordon to try to resolve the issue. Gordon says he had no prior knowledge of the problems at Canyon Square, despite his focus on rental properties through the Slumlord Task Force.

He says Reynolds told him she was the mayor of one of California's wealthiest cities. He says she told him she was "horrified" and that she wouldn't allow a property like Canyon Square to exist in its condition in Beverly Hills.

Reynolds and Pepper assured Gordon that the violations would be corrected. However, with numerous vacancies already, Ontologics was in a tight spot.

While repairs were being made, and contractors were submitting bids, the money to pay for repairs was dependent on tenants' rent. The city's ban on renting apartments meant there was significantly less money available.

Alisa Shepard says she pointed out the problem to McBride, who then scheduled a March meeting to consider how the city might help the Shepards get money to do repairs.

"We go into this meeting, there's Pam Falco, singing the same song," Alisa Shepard says. "There's a city loan for rental rehabilitation, but there's no money available."

What happened next, according to Alisa Shepard, was completely unexpected, given that the purpose of the meeting was to discuss ways for the Shepards to get money to make repairs.

McBride handed Steve Shepard a city settlement agreement and told him to sign it.

The settlement agreement, according to the Shepards, included terms detailing payments for repairs and a financial donation to Neill's community association. Steve Shepard, as manager of Ontologics, says he didn't have authority to sign the agreement without permission from his financial partners and company shareholders.

He refused to sign.

McBride, according to Alisa Shepard, then asked if the couple had received their civil citations yet. The city, according to the Shepards, had cited about 35 code violations at Canyon Square, even though Rental Renaissance team members knew some violations were being addressed.

"It became clear to me there was a different agenda here," Alisa Shepard says. "This was all about getting money out of us. They were sabotaging our efforts [to make repairs]."

Pepper became leery once the city issued citations, according to Steve Shepard, and he declined to put any more money into the property at that time.

The relationship between Ontologics and the city was deteriorating rapidly. As it dissolved, the Shepards heard more confounding statements from Rental Renaissance team members.

At a Westwood Community Association meeting, Alisa Shepard says, McBride made a public announcement that the city's goal was to make every property owner in Westwood sign a settlement agreement.

"She said, '. . . either voluntarily or through court,'" Alisa Shepard says. "It was clear to me they were out to bully everyone."

By July, tensions over Canyon Square had resulted in an impasse, according to the city.

"They hadn't done a damn thing," Gordon says.

Residents began to complain about the complex, Gordon says. The Slumlord Task Force placed the complex on its updated list of the worst rental properties in Phoenix. Someone leaked to the press that one of the principal owners was the mayor of Beverly Hills.

The city geared up for another raid. Boling, deputy director of Neighborhood Coordination, says the action was inevitable.

"At some point, we have to say, 'They're not going to cooperate with us,' [and] we need to move to the next step," he says. "Our next step was our coordinated code enforcement activity."

On September 14, 2000, the city entered Canyon Square.

Armed with search warrants, nearly 100 inspectors and law enforcement officers scoured the complex. More than 900 citations were written.

The media had a field day. A newspaper columnist crafted a song berating Vicki Reynolds to the tune of The Beverly Hillbillies television show theme song. Gordon lambasted the out-of-state owners, saying he was ashamed of them. He and Neill appeared together on news reports, talking about how terrible conditions were at Canyon Square.

Two months later, the city filed its citations in court. All told, Ontologics and Canyon Square Associates, the two companies listed as being responsible for the property, faced about $2.3 million in fines.

The raid was viewed as a success. Gordon got his headlines. The apartment complex was shut down. A new owner has since bought the property, and is making repairs.

But the well-planned, highly publicized effort by the Rental Renaissance team, like so many other attempts in Westwood, accomplished significantly less than what was publicized.

On November 7, 2001, with little fanfare or media coverage, the city closed its case with Ontologics LLC and Shepard. A separate case is still pending against Canyon Square Associates, whose majority owners were Reynolds and Pepper.

Shepard is not allowed to discuss the plea agreement, but court records detail the terms of the deal, and it can only be viewed as a failure on the city's part.

There is the money to assist construction of the Marc Atkinson Community Center. The public apology to Neill's Westwood Community Association. The agreement from Shepard not to be involved with rental properties anywhere in Arizona. And the documents he must turn over.

The $20,000 that the city did get for its trouble will go to the same project that Sundowner Investors refused to contribute to in 1997.

The community center, dreamed up by Neill to honor Atkinson, a Phoenix police officer slain while pursuing suspected drug dealers, was supposed to begin construction in October. The groundbreaking has yet to occur despite more than $31,161 in donations raised by Neill since 1999.

Ontologics attorney Robert Jarvis says his clients agreed to the payment only if the money did not go directly to Neill's organization.

"It was paid to the park [through] a financial institution to ensure as best we could that the funds would be used for the community," Jarvis says.

The city remains undeterred.

According to Gordon, who was interviewed before the plea agreement with Shepard was finalized, the enforcement effort will continue in Westwood.

He says the city has acted appropriately during the past four years and that it has been successful in its goal.

"These problems don't stay localized," Gordon says. "If there's a cancer, just like in a body, it's going to spread. If you arrest the cancer, it won't spread to the healthy parts of the city."

That's why the city remains vigilant, he says, and apparently why the Rental Renaissance team remains intact.


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All-access pass to top stories, events and offers around town.

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