Bad landlords measure gets unanimous Senate committee support

A measure that allows utilities to ask courts to appoint receivers for certain landlords who are behind on their utility bills passed unanimously by a Senate committee on Thursday.

Senate Bill 114 comes from hundreds of residents of several Indianapolis complexes last year after the landlord failed to pay their bills.

“A lot of litigation followed, from which we learned that there wasn’t a really good cure for this situation,” author Sen. Eric Koch, R-Bedford, told the Senate Utilities Committee Thursday.

“While everyone hopes we never see something like this again, it’s certainly possible and likely,” he continued, “particularly in Marion County and even in our varsity communities across the state where there are multi-family homes.”

Citizens Energy Group briefly turned off the water for hundreds of tenants in two Indianapolis affordable housing complexes, both owned by Ohio-based nonprofit JPC Affordable Housing, last February. The landlord had collected utilities as part of his rent but had not passed them on, resulting in an unpaid bill of over a million dollars.

Four properties owned by JPC – and their 2,000 residents – again came under the risk of closure in August and September this year, only averted by a deal that required JPC to sell the properties. It was nearly $2 million in arrears on bills at the time.

Such shutdowns of essential services risk mass displacement: if a health department declares an apartment uninhabitable due to a lack of water, the residents would be evicted.

Indiana Attorney General Todd Rokita filed a lawsuit against JPC leaders — attempting to appoint a receiver — but was dismissed by the Marion County Superior Court for lack of credibility.

The details

Senate Bill 114 would allow courts to appoint bankruptcy trustees when nonprofits, limited liability companies and other corporations are being dissolved, defaulted or about to become insolvent, or have forfeited their corporate rights. This currently applies only to Indiana Code corporations.

And the bill would allow utility companies to request beneficiaries if an apartment building owner hasn’t paid their bills for at least 90 days or is at least 60 days behind on a payment plan.

It only applies to properties with four units or more and landlords who collect utility payments as part of the rent — not in cases where utilities bill tenants directly.

Koch’s bill received broad support from Indianapolis faith-based attorneys, housing, utilities, insurers and bankers in a 15-minute hearing.

“This small step will help send a message that Indiana is no longer ripe for homeowners to do whatever they want,” said Rabbi Aaron Spiegel, who leads the Greater Indianapolis Multifaith Alliance.

Der Spiegel also pointed to the above-average proportion of out-of-state landlords in Indiana and called for more rights and recourse for tenants.

Bridget O’Connor, head of government and external relations at Citizens Energy Group, said the company supports the legislation, calling it an “additional tool” for utilities.

“Current options for the utility are very limited,” O’Connor said. “…This bankruptcy management tool provides the protections needed for utility companies, residents of the apartment complexes, and the rest of the utility company’s customer base.”

The committee approved it 11-0, with several Democrats asking to be added to the bill. It will now go to the House of Representatives for a second reading.