The Committee Hearing is TODAY – Wednesday, September 14th at 2pm (please arrive at 1:30pm) at San Diego City Hall. You can RSVP through Facebook.
The address is: San Diego City Hall, 202 C Street, 12th floor, San Diego, CA
Ordinance would fine banks $1000 a day for failure to maintain foreclosed properties.
The Alliance of Californians for Community Empowerment (ACCE) and the Center on Policy Initiatives (CPI) have released a brief outlining the costs of foreclosed properties on neighborhoods and cities. Some of the points they raise:
- Foreclosures harm the value of all homes within a neighborhood.
Homes left vacant and untended during and after a foreclosure can become nuisance properties, deterring potential homebuyers and lowering home values in the neighborhood. Homes in foreclosure experience an average 22% loss in value, and homes within 1/8 of a mile of a foreclosure also decline in value. - Foreclosures undermine the financial stability of homeowners and their neighbors.
Lower home values mean families have less home equity to use to fund retirement, pay tuition, start businesses, or pay medical bills. Home equity is generally at least two-thirds of the average pre-retiree’s total assets. - Foreclosures erode local tax bases and revenues, impacting services for everyone.
Lower home values result in less property tax revenue raised. The reduction in property values has decimated the tax bases that support state and local budgets. A National League of Cities survey found that foreclosures and the declining housing market are among the leading causes of fiscal budget crises. As a result, cities are hard-pressed to pay for services like libraries, parks, police and fire. - Foreclosures require police and other services, further draining local government coffers.
Local government agencies have to spend money and staff time on blighted foreclosed properties, providing maintenance, inspections, increased public safety calls, and other code enforcement services. In addition, violent crime increases 2.33% for every 1% increase in foreclosures. Altogether, a single foreclosure can cost local governments between $5,000 and $34,000.
In the fall of 2007, Chula Vista passed a tough anti-blight ordinance requiring prompt registration of vacant homes, and that can apply stiff fines (as high as $1000 per day) for failure to maintain a property. In the first 18 months, Chula Vista levied fines totaling more than $1.3 million and had collected about $752,000. Registration fees for vacant homes under the program had reached about $183,000.
Activists are looking to create a similar ordinance in San Diego. Tomorrow, September 14, the Land Use and Housing Committee will consider the “Property Value Protection Ordinance” as a way to offset costs to the city created by home foreclosures. A wide coalition of community, faith and labor organizations have built support for this ordinance. They have held two town hall meetings, each with over 90 residents attending, to discuss this issue.
Council Member David Alvarez, who has shown leadership on this critical issue, will be introducing the ordinance. This ordinance is a key building block in a larger campaign to hold Wall Street Banks accountable.
Show your support by attending the Committee Hearing on Wednesday, September 14th at 2pm (please arrive at 1:30pm) at San Diego City Hall. You can RSVP through Facebook.
The address is:
San Diego City Hall
202 C Street, 12th floor
San Diego, CA
If you are not able to attend please sign the petition to the members of the San Diego City Council in support of the Property Value Protection Ordinance.
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Great job by all who attended today!
CPI has issued this press release after the Committee Hearing today:
San Diego takes first step toward fining banks for foreclosures
A committee of the San Diego City Council today 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.
Does the ordinance require foreclosing banks to pay a registration fee whenever they file a notice of default? This was a component of Chula Vista’s groundbreaking law – they were one of the first in the nation to impose it, and for good reason. Once the bank files the notice, it puts the city on alert to start monitoring the property, and the fees collected can be used to get a code compliance officer to drive by once in a while to see what properties are abandoned and being allowed to decay, thus giving them a reason to impose fines.
I’d be surprised if Chula Vista has only collected $2.7 million by fining banks, I know my old bank paid $100,000 or more during my tenure that lasted through 2009, and we had a full staff of field inspectors based in San Diego checking every property at least once a week until that safeguard got slashed from my office budget, so our small operation was probably the best equipped in the nation as far as property maintenance went.
All in all a registration/monitoring ordinance can do a lot – both in terms of replacing lost revenue from taxes and in enforcing codes that improve quality of living for neighbors that have to live among foreclosures. I won’t buy into the “recover a small portion of the cost to city government,” argument, every code inspector assigned to foreclosures should be generating revenue far beyond the cost to employ that person with little effort. Unless, that is, banks have drastically cleaned up their act since I left the industry – a proposition easily disproved by regular conversations I have with those still in the know.