The Department of Building Services has become Oakland's problem child.

In just a decade the department has been investigated by both the Alameda County Grand Jury - twice - and the FBI. According to city officials, the Oakland City Attorney's office has quizzed Building Services’ inspectors about their practices, and even the Alameda County District Attorney's office weighed in on the department's use of one type of liens often issued...

This article is part of 'Oakland Inside,' a continuing investigative news series that examines the inner workings of Oakland City Hall and explores accountability issues around CEDA Building Services. This coverage was made possible by a grant from The Fund for Investigative Journalism. Read all stories in this series. 

(Editor's Note: In early July, the Alameda County Grand Jury issued a report blasting the city's Building Services division, the department in charge of tackling blight and enforcing housing code laws. The report was highly critical of a number of  Building Services practices, including imposing excessive fines, allowing inspectors to intimidate and threaten property owners and the department’s frequent use of prospective liens.)

A plethora of property owners complain bitterly about bullying city investigators and heavy liens that have resulted in financial ruin for them. Currently about a half dozen lawsuits filed by residents against Building Services  are now in the Alameda County Superior Court pipeline.

Read the Grand Jury Report.

Late last week, top Oakland City officials sat down with Oakland Local to discuss the latest Alameda Grand Jury report and the systemic problems connected to the Building Services Division. Newly appointed City Administrator Deanna Santana, CEDA Director Walter Cohen and Building Services Director Ray Derania have vowed to implement a "culture change" in the division.

"Generally speaking, the (Grand Jury's) recommendations hit the mark," Cohen said. "And we are working on (the recommendations), we have been working on them."

However, Cohen did not say if anyone has been or will be disciplined for some of the practices alleged in the grand jury report.

Santana, who was only four days in as city administrator, said in the interview that she will do a top to bottom review of Building Services and make changes as needed.

"If we're wrong, we're wrong," Santana said. "And so through the reviews that we do from a management perspective or any other additional reviews, if we are bullying residents, intimidating residents or using our power to regulate in a way that is inappropriate or unethical or illegal, then that's not acceptable and I can tell you that my goal will be to fix that and to do system redesign."

The officials said that although they are still working on their formal response to the grand jury report, they felt it important to respond to an interview request from Oakland Local.

At times during the interview, officials were both blunt about the department's problems, and fuzzy on key details and incidents, including dates around when the FBI investigated Building Services, or how the city is going keep better track of its records - as the Grand Jury recommends - while its new computer system gets up and running.

While agreeing that the recent grand jury report was largely accurate, Oakland officials point to some of the flaws connected with the Grand Jury's report, including the fact that neither Cohen, nor Derania were interviewed by the grand jury.

Cohen also noted that the report only looked at a small number of cases, 50, compared to 8,000 annual complaints the city responds to.

"My hope in the (city's response) is that we bring about some clarification (to grand jury report)," Santana said.

Problems of the past

The Alameda County Grand Jury of 1999 began looking into issues around the division's operations, policies and procedures. The grand jury recommended that the division adopt clear written instructions around renovation of residential and small commercial properties; limited building code violations, and the severely limited use of prospective liens.

It's unclear, however, why the division didn't effectively deal with the needed improvements called for more than a decade ago by the Alameda County Grand Jury.

Also, in the years after the first grand jury investigation, according to the city, the FBI began looking into the division.

"Prior to my time, and I even want to say during part of my time ... the FBI was apparently  all over this place (Building Services)," Cohen said.

Derania said no one was indicted as a result of this investigation.

Then, there was the time when the Oakland City Attorney's office became interested in the actions of building and code inspectors.

"I can tell you that the former City Attorney brought in a whole host of inspectors and subpoenaed them, (and) to my knowledge, no one was indicted," Cohen said.

It's unclear what the City Attorney's Office was specifically examining or when those actions took place.

Code police

Oakland has 31 inspectors, 12 of whom are in the code enforcement office. According to Cohen, in the late 1980s or early 1990s, the city began using code enforcement as "a means to help  make people aware of keeping their properties up to code".

According to Cohen, the change in code enforcement has brought about friction between property owners and inspectors.

"I think this notion of code police is not terribly healthy for anybody ... because it's a fundamentally adversarial system," Cohen said. "It's driven by complaints."

The Alameda Grand Jury said inspectors dealt with property owners in “an atmosphere of hostility and intimidation” and that the problems were systemic throughout the department.

"Where there's smoke, there's usually some fire, and there have been people who've been in the department who are no longer in the department. I think some of them retired, some of them left, (or a combination of reasons)," Cohen said.

Cohen did not give a direct answer on whether anyone in the department was disciplined as a result of issues connected to the grand jury's finding.

"There have been ethical lapses. At least one person is gone, likely more for that than anything," he said.

Cohen acknowledged that there have been inconsistencies with code and building inspectors on applying city rules.

"That practice must stop," Cohen said. "Some of that practice will stop because of training, some of that practice will stop because of orders."

Prospective liens

One of the biggest complaints cited against the Building Services Division is the use of perspective liens, which is a first notice of a code violation or blight and is described by the city as being under $1,000.

Cohen defended the city's use of perspective liens and Derania noted that the policy for use is embedded in the city's municipal code.

"Part of the reason you do perspective liens is until you know what the number is, you want anybody looking at titles to know that there is an issue out there. The issue can be resolved, the issue may not be resolved, but you don't want a buyer or anybody interested in (the) title, not to know."

Oakland's use of perspective liens is unusual even by the city's admission.

"Other cities do (use perspective liens) but not to the extent we do," Derania said. "It's an old tool."

More than a year ago, costs connected to prospective liens came about after Oakland officials learned the Alameda County District Attorney's Office was inquiring into the practice.

"It's probably some 15 months ago that we met with the District Attorney's office who wanted to advise us about what they were thinking about perspective liens. As soon as we heard it, the policy changed ... to use perspective liens, but no less than $1,000," Cohen said.

According to Derania prospective liens were halted after the grand jury's report came out in late July.

"We've frozen (prospective liens) and now ... for the ones as of the date when the grand jury report came out, we're reversing those and if someone sent in (money) we're refunding the money. Anything that is in the pipeline, it is being reversed."

Cohen said new rules must be put in place to prioritize fines and liens.

"At some point I would even argue that liens are not that an effective tool," he said. "They may be more effective when you're dealing with multiple offenders - people who own a lot of property, who may have multiple cases. But it certainly isn't the way you want to deal with single family property owners or people struggling. We want to help keep properties in productive use in Oakland. It's not the intention, ever, (of Oakland) to harm people. "

Next steps

Some of the specifics next steps the city will take will be made later when Oakland issues a 45-day response on Monday, the officials said.

New training procedures are likely to be put in place. City officials said Building Services staff are working with a 30-year-old operating system that needs to be modernized.

In addition, practices and procedures in the division need to be updated and clarified.

Cohen said the city also will examine its fines and fees, noting that minor violations and egregious violations shouldn't pay the same costs.

Santana said the city has a short window of time to implement effective change.

"The key thing here is (the grand jury report) is demonstrating a complete lack of confidence in local government and it is something that is important for us to restore," she said. "There's lots of other changes that we're going to have to drive over time, I think that's going to be important to me... . But, it is something we can't just let go on, and on, and on. So, we're going to have to get our arms around this rather soon."

Additional reporting by Barbara Grady

For earlier stories see the Index page: Sending residents into foreclosure: Has Oakland's CEDA Building Services Group done more harm than good? 

This series exploring accountability issues around CEDA Building Services was made possible by a grant from The Fund for Investigative Journalism.