Richmond’s controversial housing plan takes step forward

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Richmond moved one step closer to implementing its eminent domain plan Tuesday night by tightening guidelines for the program, which aims to save struggling homeowners from foreclosure.

The approval of last night’s resolution for the program, called Richmond CARES, gives priority to neighborhoods hardest hit by the housing crisis and qualifies only those homeowners who have balances below the conforming loan limit. The council also instructed city staff to reach out to banks in search of alternative principal reduction strategies and to seek partner cities to form a Joint Powers Authority. While the agenda item was approved 4-2, the city’s eminent domain plan needs the council’s supermajority for final approval.

“It is the community that is driving this program and the homeowners that have so much to lose,” said Mayor Gayle McLaughlin, the item’s sponsor.  “Today is an opportunity for us to move to the next step and show our strength not to bow to Wall Street.”

McLaughlin said the city would only use eminent domain “when a clear public purpose is served.”

It was standing room only in the Council chambers, and dozens of residents and community leaders toted signs in support of the plan.

Although Richmond remains the first city in the country to consider using eminent domain to stem foreclosures, McLaughlin said cities across the country – including San Francisco, El Monte, Seattle, WA, Yonkers, NY, Irvington, NJ – are mulling the idea and have expressed support for Richmond.

With nearly half of the mortgages in Richmond underwater, the city is proposing to buy properties at current market value in hopes of preventing another wave of foreclosures.

Richmond officials are planning to use the city’s eminent domain power to seize the mortgages that banks refuse to or reduce, slash the value to current market value, and resell them to other lenders. The program could reduce the principal owed by homeowners, ultimately making monthly payments more manageable.

“We’re here today saying that it’s time for a local solution,” community organizer Melvin Willis said. “The financial industry doesn’t rule us. We are standing up to Wall Street.”

While most residents spoke in favor of the plan, some still worry eminent domain isn’t the solution.

“I have no problem with sticking it to the banks, but for the most part the banks no longer own these loans,” said Richmond resident Don Gosney.  “While we all want to see distressed homeowners find a solution to this problem, this is the wrong approach.”

Vice Mayor Corky Booze and Councilman Jim Rogers, who voted against the resolution, both expressed concern about the potential financial and legal risks to the city.  Bates, who was absent from Tuesday’s meeting, sent an email to the council proposing a ballot initiative that would allow citizens to vote on the eminent domain plan in 2014.

“I understand it’s fun to be risky… but my job is not to listen to my anger, my job is to try to make the best decision for the city of Richmond,” Rogers said. “Until we resolve the liability issue, it’s a deal breaker for me.”

With banging drums and soaring chants, more than 100 people rallied outside of City Hall ahead of Tuesday’s meeting in support of the housing plan.

“You’re not alone,” Doris Ducre said. “Hang in there. Fight. We will win.”

Despite the fanfare, Constance Delany said she’s still leery.

“Have you tried anything else?” Delany asked the council members. “I don’t like to see the housing crisis destroying city after city, but when I hear eminent domain, red flags go up. I’m seriously concerned about the motives behind the slogan.”

9 Comments

  1. This is one of those issues where the community will hold their rallies, throngs of people–both Richmond residents and outliers–will line up to speak and the members of the Council will hurl insults back and forth. Normally peaceful residents will sit in the audience and show their baser side by allowing their hostility to reign unchecked.

    And it’s all for naught. There isn’t a single person—citizen or Councilmember—who doesn’t come to a meeting like this with their minds already made up.

    So why do we go through the charade of hosting a public meeting soliciting input from the public? Why not just have the Council take their pro-forma vote and move on to the numerous other items on the agenda? [In the neighborhood of 15 agenda items were put off til next year because the Council ran out of time.]

    The members of the Council aren’t really listening to the speakers except to help validate their own positions. Some don’t even show the speakers the courtesy of pretending to listen. They leave the room or they joke around with the person sitting next to them.

    Some even keep a running count of the number of speakers for an issue and those against the issue—as if that’s really supposed to mean anything. No one elected these speakers to represent the people of Richmond—especially not those that came from San Francisco, Oakland, Berkeley, El Cerrito and Antioch. [Why do outsiders always want to come into Richmond and try to tell us what to think and what to do? Do they have so little respect for our ability to think for ourselves?]

    The scariest part about last night’s proceedings—the part that these reporters seem to have missed—is the attempt of a select few members of the Council to form a Joint Powers Authority wherein Richmond will partner with other communities to forge a stronger base to fight the pension plans and insurance companies who have purchased these home loans.

    What was brought up after most of the room had emptied was that if this JPA is formed, Richmond will give up their right to decide who will decide how an eminent domain case will be handled. It currently requires a super majority of the RICHMOND City Council to decide an eminent domain request but with the JPA, it will only require a super majority of the JPA. Once we realize that the JPA will be made up of members from Richmond who only support eminent domain as a means of wrenching the mortgages from their rightful owners, it means that a group which is made up of people already solidly supportive of eminent domain will be making the decisions for Richmond. Now take a look at the list of cities the Mayor mentioned of cities she’s looking to partner with: San Francisco, El Monte, Seattle, Yonkers, NY, Irvington, NJ. Now tell me why we would ever turn over control of our City to outsiders—especially outsiders from some other part of the country—people who were never elected by the people of Richmond.

    What I’m seeing here is a last ditch effort of people elected to represent ALL of us who are reaching out to win AT ANY COST.

    Shame on them for their failure to reach out and listen to those of their constituents they may disagree with, shame on them for their failure to show respect to speakers who may have a different opinion than they do, shame on them for their failure to calm their supporters to quell the hostile tone at the Council meetings and shame in them for suggesting that the people of Richmond turn over the control of this issue to people from other parts of the country.

    • Michael Beer

      Imagine turning over the future of the homes of Richmond to a body of democratically elected representatives. Nope, says Don Gosney, I prefer we keep our homes in the hands of Wall Street, not from people from other parts of the country.

  2. Tony Suggs

    So let me get this all straight from the beginning.

    People bought or refinance houses during the buying frenzy of real estate speculation.

    Agreed to mortgages that were either zero down or very low down payments and probably adjustable mortgages, that they otherwise could not qualify for if they had to put 20% down and had proof of income.

    So, when the Ponzi scheme imploded, they now blame the banks for “forcing” them to take out these loans. They now want the City, meaning, ALL the residents to be liable and bail them out.

    And the council want to take over these properties, resell the mortgages, and essentially become the “bank” for all these properties.

    What bank will want to make any more loans to Richmond homeowners if they think they can lose their mortgages to the city?

    We will have to pay higher interest rates or be Redlined completely.

    Finally the council wants to join with other cities and create another layer of bureaucracy that is not accountable to the residents of Richmond?

    Half the country already has a negative view of Richmond due to the previous crime levels. Then it was the soda tax. The E cigarette ban. Now this.

    The council evidently wants to be in the news as being “progressive” or “innovative.”

    To most others I talk to, they think Richmond is NUTS!

  3. jim

    Just remember this, Mr. Bates, that this rabble you’re talking about…they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?

    • I heard the City Clerk read the letter from Councilmember Bates and not once did he refer to anyone as “rabble”. So where does anyone get off putting words into someone else’s mouth in such an incendiary fashion?

      Or perhaps it’s you that thinks of them as rabble?

      And really, they do MOST of the “working and paying and living and dying in this community”? That pretty much suggests that the overwhelming majority of Richmond’s residents–the ones who aren’t the “rabble”–must be just sitting around doing nothing. They’re not working, not paying, not living and not dying? If true, that’s incredible.

  4. RogerF

    I should have bought a $700,000 house next to the Country Club even if I couldn’t afford it. If the city proceeds with this, I know what to do next time.

  5. John Ryskamp

    Once Richmond uses eminent domain for mortgages, that will raise the level of scrutiny for housing above Lindsey v. Normet minimum scrutiny. I see Richmond is trying to limit participants in the program. However, they will be unable to do so. Because once they put the policy in place, the REFUSAL to buy someone’s mortgage will have to “further an important government interest in a way that is substantially related to that interest.” It will be impossible for Richmond to deny homeowners relief under this standard (assuming that buying mortgages through eminent domain doesn’t raise the level of housing to STRICT scrutiny). Denied homeowners will claim a Due Process violation.

    Complicating this whole matter is that in Koontz, the Supreme Court just raised the level of scrutiny for PROPERTY above minimum scrutiny. Both housed individuals AND mortgage owners can claim this right.

    Finally, if Richmond raises the level of scrutiny for housing, RENTERS will come in to claim a right to have Richmond seize the landlord’s mortgage, write it down, and lower rents.

    Actually, any number of rights are being recognized these days. The Affordable Care Act raised the level of scrutiny for medical care above minimum scrutiny. In Sebelius, Roberts stated the policy as follows: “Eventually everyone will need medical care.”

    Isn’t it also a fact that eventually everyone will need housing, and education, and employment, and income?

    Someone should sue and say that even with what it has already done, Richmond has raised the level of scrutiny for housing, and can be FORCED to buy underwater mortgages, no matter what the City Council says.

  6. Tony Suggs

    The quickest and easiest way to bring the property values back up in Richmond is:

    Improve public safety. Make the city as safe as possible for its residents.

    Improve the appearance of the city. ENFORCE the codes already on the books for cars blocking sidewalks or parked on lawns. Clean up the trash. Make the residents place their garbage containers in back yards instead of leaving them out all week in plain view.

    Have the residents pick up the trash in front of their homes and businesses.

    Clean up the graffiti immediately.

    Get the trucks, campers and other vehicles that park for weeks at a time off the streets.

    That will get property values back up and attract new businesses, improve the tax base and provide more jobs.

    All I see from this eminent domain is another lawsuit, thousands of dollars paid to defend it and unlimited potential liability.

  7. I am pleased to see that Richmond Confidential does not censor comments on this contentious issue. In contrast see the Facebook ads perporting to be from local citizens who oppose the city’s plan to use eminent domain. If you post a critical comment on their Facebook ads, you are blacklisted. I was.

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