Bankers blight

David Alvarez
- Photo by David Rolland

Starting with the zip code 92154, Corinne Wilson, a researcher with the Center on Policy Initiatives, has been studying the costs of foreclosures in San Diego. By looking at current data and projecting out through 2012, Wilson estimates that the loss in property value in that area alone—Otay Mesa, Nestor and San Ysidro—is $1.5 billion over five years.

“There have been studies put out that say that having a foreclosed house next door to your house impacts the property value, and within even an eighth of a mile of your house impacts the property value,” she said.

Part of that has to do with properties that linger, uninhabited, pending a trustee sale or because a lender’s walked away from the property.

Last week, CityBeat reported on a trio of state bills, known as the Homeowner Protection Package. One of those bills, AB 935, sponsored by Assemblymember Bob Blumenfield of Los Angeles, would impose a $20,000 per-foreclosure fee on banks to help mitigate the economic impacts of foreclosures—from law enforcement assisting with evictions to cities having to maintain blighted vacant properties. But the bill’s been held up in committee.

At a community forum on foreclosures last Thursday, San Diego City Councilmember David Alvarez, whose district includes 92154, said he’s “very interested” in introducing a so-called “blight ordinance” in San Diego. Similar to ordinances in Chula Vista, L.A. and Riverside, it would create a registry of foreclosed properties and impose a fine on banks that don’t maintain those properties.

“It punishes bad actors and provides a revenue stream for the city,” said David Lagstein, an organizer with Alliance of Californians for Community Empowerment.

Alvarez said that when he takes walks around his district, it’s not David Alvarez uncommon to hear complaints about foreclosed properties. On a walk in Otay last week, he said, “everybody on the street said the problem in the neighborhood is that house,” referring to a foreclosure.

Diana Silva Martinez, chief deputy with the code enforcement unit in the City attorney’s office, said that while the city’s municipal code holds whomever has a financial interest in a property—in the case of a foreclosure, the bank—responsible for securing and maintaining the property, “some banks are good and they’ll work with you, while others just ignore you.”

The City attorney’s office can put a lien or special assessment on a nuisance property to recover costs incurred through abatement actions, but “that just recovers the cost of boarding and securing,” Silva Martinez said.

It’s indirect costs—the time code-compliance officers spend checking on a home, for instance—that are the issue, Wilson said.

“Part of the [city’s] budget crisis is the cost of foreclosures: lost value, lost property taxes and increased costs of dealing with the foreclosed homes.”