New Orleans Some months ago the City of Richmond in California, long seen as little more than a company town for the giant oil conglomerate, Chevron, rose to the attention of millions of families still trying to sort out the problems of threatened foreclosures. Richmond uniquely proposed to use the powers of eminent domain to condemn properties that were being foreclosed or were “underwater,” owing more to banks than the market value of the homes, in order to force refinancing or to effectively sell the homes back to the previous owners after seizure for the true, current market value.
On Wade’s World on KABF, I recently caught up with Marilyn Langlois, a co-founder and coordinator of RPA, the Richmond Progressive Alliance, which along with ACCE, the Alliance for California Community Empowerment, formerly California ACORN, has been the primary proponents of this strategy to see what was happening now with the headlines off of the front pages. A lot has happened, but also not surprisingly, Wall Street is putting up a lot of hurdles on this road, just as they did earlier when ACCE tried a similar strategy in Riverside outside of Los Angeles.
With their progressive mayor helping lead the way, as a first step rather than condemning the properties, Richmond made a first offer to buy 600 of the 1200 Richmond homes that were underwater for approximately 10% less than their independently appraised market value. The city offered 10% less to cover their costs and the closing fees to make the deal work so that it was also fiscally neutral for the Richmond taxpayers in this working, moderate income city. The response: not a bite, a whimper not a roar. The Wall Street freeze out continues, despite the fact that Richmond has a private investor willing to finance the deal.
The next step hasn’t been taken, according to Marilyn, is to formally seize the properties under eminent domain unfortunately because pressure from business, Chevron, and the banks has sent the deciding vote needed on the council sideways. The next move really depends on the November elections. The mayor is term limited, but RPA has plans and feels it will be in a competitive position to win the votes to make this happen. They are also trying to join with a number of other cities in the Bay Area in a consortium that would make their attack on foreclosures more powerful. Having been in the meat grinder on this issue for a long time, wisely they are also trying to get legal opinions supporting their strategy in order to prevent being held up in court for years and years, once they pull the trigger on these seizures. Court delays would make the victory hollow since fewer and fewer families could survive the financial squeeze that long.
It’s not easy for any city, especially a smaller one, to forge new ground in public policy, but here’s hoping that Richmond can break the hard ground on stopping needless foreclosures.