Visit to Oakley CA 29SEP2011 – Pete Bucklin & Ellis Goldberg met with Mayor Jim Frazier & City Manager Bryan Montgomery for an hour. 

We told them who we are and why we meting with them.  They liked the idea that we want to help them and if they are successful we want to spread the news and encourage other cities to follow Oakley’s model.  As the conversation was open ended rather than agenda driven here are some of the things discussed.

• The program has been in place for 18 months and 50 letters were sent to owners concerning blighted property.  They estimated that 200 properties were blighted 18 months ago, now there are 25.  Reasons:
  • 1 full time inspector ($100K/yr burdened cost) rides through neighborhoods looking for blighted property and takes action to enforce rules.
  • Jim Frazier – has his companies employees remove blight (he pays them – he is a licensed contractor and he volunteered with his teams).
  • Neighbors take care of some blighted properties to keep up their own property values.
• Bank of America has paid $9K in fines.
• Both B of A and Wells Fargo are good about registering property per legal requirements – other banks not so.  Credit Unions are also good.
• Issue: 8-9 month pre-foreclosure period when no one is responsible for the property.  This is the time between the owner surrendering the property to the bank and the bank foreclosing, so they can sell the property.  During this period squatters can occupy the property and can’t be thrown out because only the owner (at this point unknown) can ask for an eviction.
• Oakley takes a soft – hard stance in enforcement.  Soft in trying to get the owner of blighted property to remove the blight.  Hard when dealing with banks that leave foreclosed property blighted.
• Fines: $200 / day after ten days notice, then $500/day then $1000/day on the 3rd day. 
• ROI Analysis: Bryan pointed out that last year assessed property values decreased 2% in Oakley vs. 7-8% in neighboring Antioch, where inspectors were let go.  That means more property tax revenue for Oakley, than if they too suffered a much greater decrease in property values.  The return on investment not only comes to the city government but to also property owners in the city.
• Why do banks foreclose instead of helping the owners by renegotiating the mortgage payments?  The federal bailout guaranteed the banks would be made whole on the mortgage if they foreclosed.  If they don’t foreclose the banks risk not being made whole and losing money.  Our goal is to change that equation so that the banks now consider the cost of keeping up property when they foreclose.  That gives the bank a negative cash flow while looking for a customer.  A deal with the original owner now is sweeter (bird in hand – bird in bush).