Before the kids arrived at the daycare business she ran out of her Mountain View home, Gabriela Castellanos would take a walk around outside, making sure there were no used condoms, syringes or human feces on the ground. The property next door, an empty foreclosed home, had become a hangout for drug dealers, prostitutes and stray animals.
"Cats, dogs, rats—it was like the San Diego Zoo," she said. She laughed, then added, "It sounds very dramatic, but I'm not exaggerating."
The house was vacant for only about six months, but that was long enough to put an end to Castellanos' daycare business. Someone was killed in the house, and a home behind hers, also vacant, caught fire and parents got scared.
Castellanos said she complained to police—as did other neighbors—and was told it was the bank's responsibility to clean up the house.
"We are working families," she said. "We try to contribute to society, but the banks are destroying our safety."
A study released in June by the Center on Policy Initiatives, a San Diego think tank that focuses on economic- and social-justice issues, estimated that between 2008 and 2012, there will be roughly 57,000 foreclosures in San Diego alone, costing local government between $134 million and $855 million for police, fire and code-enforcement services. Homeowners, too, will take a hit—the study estimates $19.2 billion in lost property value.
In tracking foreclosures by zip code, the CPI study highlighted the fact that the neighborhoods hardest hit are the city's poorest and most densely populated—City Heights, Southeast San Diego and Otay Mesa—where folks don't always complain for fear of retaliation if the home's been overrun by the sort of people Castellanos encountered.
Meanwhile, the city's Neighborhood Code Compliance Department is at its lowest staffing level in seven years, and a position created specifically to deal with vacant properties was eliminated in 2010, said Bob Vacchi, the department's deputy director. Right now, Vacchi has only 11 inspectors to handle all housing- and building-related issues citywide.
CPI and the Alliance of Californians for Community Empowerment (ACCE), a group that advocates for low-income communities, think they've found a solution. Similar to laws in Los Angeles, Long Beach and Chula Vista, a proposed Property Value Protection Ordinance (PVPO) would require banks to register a property with the city—and pay a fee—within 30 days of issuing a notice of default, the first step in the foreclosure process, whether the property's vacant or not. The fee's not been set, but other cities charge around $150. Should a bank fail to register a property within that time period, there would be a fine starting at $100 a day. Additional fines would be levied on lenders who fail to maintain vacant properties or don't file with the city a document promising to repair, rehab or demolish the property.
"It punishes bad actors and provides a revenue stream for the city," said David Lagstein, an organizer with ACCE.Since implementing its foreclosure ordinance in 2008—a law that's been held up as a model—Chula Vista's been able to hire five additional code-enforcement officers from fee and fine revenue, said Corinne Wilson, the CPI researcher who authored the foreclosure study. Though a home is likely to still be occupied when a notice of default is filed, the registry, which would require an update if a bank sells a home's mortgage to another lender, makes it easier for the city to figure out who's responsible for a property if and when it becomes a problem, Wilson said.
"Our intent is to give code enforcement the ability to figure out who the responsible party is without hours of work put into it," she said. It's not unusual for a loan to change hands and become difficult to track.
Long Beach, Wilson pointed out, originally required a home to be registered only once it became vacant but last month expanded its ordinance to require registration once a notice of default is issued.
"The core piece of what our ordinance is about is the foreclosure registry," Lagstein said. "This will be a benefit to code enforcement."
But with so many notices of default going out each year, there are questions about whether a registry, even if it comes with more staff, is the best use of resources.
"There are thousands of those [properties], and probably most will never be a problem," Vacchi said. "If the opportunity to add staff for vacant properties became available, I would prefer to add a couple of field staff to do some targeted proactive work on existing vacant properties rather than adding administrative staff to compile and monitor a registration list."
Since 1996, the city has had a vacant-property ordinance, but lawmakers acknowledge there's a loophole. The ordinance applies only to structures that are "vacant and unsecured or boarded," meaning not much can be done about vacant structures that still have all their doors and windows but have become neighborhood nuisances—where the property's lot, for instance, has become a dumping ground, or a perpetually abandoned building doesn't reach the level of nuisance but is nevertheless an eyesore. At the request of City Councilmember Todd Gloria, whose district includes the long-vacant, unsightly Pernicano's restaurant in Hillcrest, the city's been working for nearly two years to update the vacant-property ordinance to include not just unsecured and boarded structures but all vacant structures and lots.
But advocates of the type of ordinance that CPI and ACCE envision think the city needs both: The registry, they say, puts banks on notice that a property's being monitored. And, the fees the registry generates mean code enforcement can do more than just respond to complaints."More proactive code enforcement is something the community's said they want," Wilson said. At a recent mayoral candidates debate, in response to a question about blighted foreclosed properties, Bob Filner and Nathan Fletcher said they'd like to see the city implement an ordinance similar to Chula Vista's.
But getting revisions made to the city's current ordinance—let alone a property registry—could prove challenging.
San Diego Regional Chamber of Commerce policy coordinator Mike Nagy, who was on a committee that reviewed the revised vacant-property ordinance, said that among other issues, an expanded definition of what constitutes an abandoned property could be a slippery slope. He used Pernicano's as an example.
"Yes, the property owner's not doing anything with it; however, he is keeping it to code—but it's still considered an eyesore to some people. At what point do we start telling property owners, We don't like what you're doing; it could be nicer'? At some point, it comes down to a property-rights issue."
Both the property-value-protection ordinance (PVPO) and the revised vacant-property ordinance were given a side-by-side comparison at a meeting of the City Council's Land Use and Housing Committee last week. Sherri Lightner, the committee's chair, said more information's needed about what the PVPO will cost and how other cities have implemented theirs. She asked the City Council's Independent Budget Analyst to report back in January.
Like Vacchi, Lightner questioned whether the PVPO could be more targeted.
"Conceivably, [we could] identify zip codes that have a high foreclosure rate," she said. She'd also like to see residents be more proactive with complaints, which, in turn, could further underscore the need for additional code-enforcement resources.
"It may be something where we have workshops for the community," on filing complaints, Lightner said, "and then just draw attention to it until it's taken care of."
As Gloria emphasized at the committee meeting, without additional resources for code enforcement, simply filing a complaint doesn't solve the problem, as was evident with a foreclosed property behind his City Heights condo.
"There were squatters, prostitution and drug dealing," he said. "I'm a City Council member and I couldn't get it solved for months and months and months."