By Center On Policy Initiatives / Sept 14, 2011
A committee of the San Diego City Council on Wednesday, Sept 14th, took the first step toward holding banks accountable for leaving foreclosed properties neglected. At the urging of Councilmember David Alvarez and community residents, the Land Use and Housing committee directed the City Attorney to draft language for an ordinance that would fine banks $1,000 a day when they fail to maintain a property.
The Property Value Protection Ordinance, proposed by CPI and ACCE, is aimed at reducing the negative impacts of foreclosures on surrounding neighborhoods and the city budget. A study in June by the two organizations found that 57,000 foreclosures are expected in the city by next year, costing homeowners $19 billion in lost property value.
Each foreclosure also can cost local governments between $5,000 and $34,000 for code enforcement, police calls and other services.
Chula Vista, one of 75 California cities that have already adopted similar ordinances, has collected $2.7 million In revenue as a result.
“This ordinance would allow San Diego to recover a small portion of the cost to city government from these blighted properties, and would discourage the drain on local property values when banks foreclose on a house and then neglect it,” said Corinne Wilson, CPI research and policy lead.
The ordinance would require banks to register every notice of default they issue and pay a small fee To maintain the registry. If complaints are received, the bank would have 30 days to clean up the property or pay $1000 a day.
Most members of the committee said they agreed the blight caused by foreclosures is a significant problem. They suggested the proposed remedy may be merged with an abandoned properties ordinance proposed earlier by Councilmember Todd Gloria. About 50 community residents attended the committee meetings to describe the damage done to their neighborhoods and support the proposal to hold banks accountable.
The committee plans to consider the ordinance at its October 26 meeting.