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Motion to kill Richmond’s eminent domain plan fails

on September 11, 2013

Vicky Conway says she is stuck in a loan she can’t afford.

She and her husband Rodney Conway bought a home in northeast Richmond in 2004 and, like many of the city’s residents, the couple’s home is “underwater,” meaning the amount they owe exceeds the market value of the house.

“I know that we’re not going to be able to retire and continue with the same mortgage payments,” said Vicky Conway, 51.

Now the Conways are banking on the city’s controversial plan to assist hundreds of troubled homeowners. Their mortgage is one of 624 that Richmond city leaders have initially proposed to buy at a discounted rate, and failing that, seize through eminent domain, that is, the power of a municipality to take over certain property.

In the wee hours on Wednesday the Richmond City Council voted 4-3, to proceed with the city’s Principal Reduction Plan in collaboration with Mortgage Resolution Partners (MRP).  More than 400 people packed the Richmond Memorial Auditorium for the meeting, which was moved to a larger venue to accommodate the crowd.

“We should stand up against Wall Street and for our community. If not us, than who will?” said Mayor Gayle McLaughlin.

This issue has brought national attention to Richmond as the first city in the country to attempt this use of eminent domain, usually reserved for public purposes such as roads and highways.

Councilmember Nat Bates and Vice Mayor Corky Booze framed their motion to kill the plan by voicing concerns over a recent lawsuit that Wells Fargo & Co and Deutche Bank AG have brought against the city, claiming Richmond’s use of eminent domain is unconstitutional.

Additionally, Bates and Booze brought attention to Wall Street’s rejection of Richmond’s recent bond offering, and MRP’s inability to provide insurance.

“We can ill afford to get in a financial fight with monies we do not have as taxpayers to defend ourselves in an issue of this nature,” said Bates.

It was a colorful crowd, with many dressed in yellow shirts to show support for ACCE (Alliance of Californians for Community Empowerment) and the mayor’s plan, while others wore red shirts to show their opposition to the eminent domain plan. During the seven plus hours of public comment and debate, residents held up signs both for and against the program. Many waved yellow flags saying, “Yes on Richmond CARES.”

“I don’t think there are absolute right or wrongs. This type of housing crisis is unique and the proposed remedy is a new concept,” said Bill Lindsay, Richmond city manager.

Lindsay said 51 percent of homeowners in Richmond are underwater on their loans, and the majority owe 45 percent more than their house is worth.

Councilmember Jim Rogers’ motion, which ultimately failed, sought to continue with the plan only if MRP agrees to provide full insurance or financial indemnification for the city.

“Very simply, a 1 percent chance of bankruptcy is a deal-breaker for me,” Rogers said.

More than 70 speakers addressed the panel expressing a wide range of viewpoints. Some, like Rogers and Booze, were concerned about the financial implications for Richmond, while others urged city leaders to “hold the course.”

Joshua Genser, a lifelong Richmond resident, criticized the plan saying it “assumes that the alternative to your program is foreclosure—that is not true, these are performing loans.”

Mayor McLaughlin told the audience that the City of El Monte in Los Angeles County is considering a similar use of eminent domain in their city; “El Monte will be our first partner, and we’ll have many, many other partners in this.”

At 1:12 in the morning, the City Council held its first vote. Bates’ motion to kill the plan went down with a 5-to-2 vote. Bates and Booze voted for it, while Councilmembers Beckles, Myrick, Rogers, Butt and McLaughlin voted against it.

At 1:30 a.m. McLaughlin called a brief recess when infighting between the city councilmembers became heated with Bates and Booze challenging the “blackness” of Beckles and Myrick. Bates said to Beckles, “You are not African American.” Booze and Bates said that by supporting the Principal Mortgage Reduction Plan, Myrick and Beckles were not protecting the interests of the black community.

When they returned, the mayor’s motion to proceed with the Principal Mortgage Reduction Plan passed 4-3 with Bates, Booze and Rogers voting against it. As 2 a.m. neared, the auditorium was mostly empty. However, cheers went up among the 50 or so residents who remained as McLaughlin motion passed.

The final vote came in on Rogers’ motion. It failed to pass, with Rogers and Myrick voting in favor, and the rest of the city council voting against it.

McLaughlin said, “We have faced a lot of pressure from Wall Street. They have made a lot of threats, but number one, I believe the law is on our side, and the lawsuit has no merit.”

“And number two,” McLaughlin continued, “I believe this is a threat to redline our city, which we must not put up with.”

If it succeeds, Richmond’s plan aims to help homeowners refinance their homes into affordable loans. If it fails, homeowner Vicky Conway says, “We’ll have to do a short-sale or walk away from the loan.”

Nancy DeVille contributed to this report.


  1. jim on September 11, 2013 at 8:21 pm

    Mr. Bates knows no low. He reminds me much of his partner in hate-crime, Mark Wassberg.

  2. Ed win on September 12, 2013 at 10:58 am

    We see with our eyes and hear with our ears but NO COMMENTS…

  3. […] Francisco Chronicle Tuesday night, Sept. 10, the Richmond, California, City Council held a meeting packed with hundreds of community members, many of them in bright yellow ACCE T-shirts, who rallied to defend the Richmond CARES principal […]

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