Wednesday, December 3, 2008

FORECLOSURE CRISIS: Clean up foreclosed home, or city will And owner will pay Las Vegas — or face fines of $500 a day

Local governments are dealing in different ways with owners that won’t maintain homes, like this one with a neglected pool, after foreclosures.

By Brian Eckhouse
Mon, Nov 17, 2008

As a growing number of cities across the country are aggressively forcing owners of foreclosed and abandoned properties to clean them up, Las Vegas is going after them with the help of a three-year-old ordinance that, until recently, wasn’t much needed.

Under the law, Las Vegas’ Neighborhood Services Department oversees cleanups of decaying or ignored homes that generate neighborhood complaints. The city may water lawns or clean pools and go after the owners for the cost. If they don’t pay, they are slapped with $500-a-day fines.
“When banks see that it costs us $5,000, they want to pay it off” as quickly as possible, Mayor Oscar Goodman said. “If not, we’ll keep on imposing these massive fines.”

Wednesday, the City Council is scheduled to consider charging one property owner nearly $300,000, most of it in fines. The council could also slap liens on three other vacant or abandoned buildings. This year, the city has put 34 liens on properties.

Other cities, including Garland, Texas, a Dallas suburb of 223,000, are taking other approaches to the mounting foreclosure crisis. Garland requires owners of abandoned and distressed properties — often lenders that repossessed them — to pay the city $2,500 for upkeep, according to a USA Today report. Goodman isn’t fond of Garland’s measure, arguing that his city accomplishes its objective without “imposing more government.”

Chicago has banned the use of plywood to board up homes after six months because of concerns that homes stigmatized by plywood attract squatters and crime.

At the county, Chief Enforcement Officer Joe Boteilho asked the district attorney’s office to determine whether local governments can force owners of foreclosed properties to pay maintenance fees.

The answer, according to Deputy District Attorney Steven Sweikert: Cities in Nevada could enact such a measure, but the county probably couldn’t do so without the approval of Carson City.

But “there’s a good chance” the county could follow Chicago’s lead and prohibit extended use of plywood on the windows of a home, Sweikert said. “It could be enforced as a misdemeanor or nuisance.” The county, which governs the unincorporated parts of the valley, hopes to use about $17.3 million in federal dollars to buy and rehab foreclosed or abandoned single-family homes and rental units.

Anger over the blight caused by foreclosed and abandoned homes is evident in the number of complaints reported by the Southern Nevada Health District.

Through Friday, the health district had received 2,772 complaints this year, compared with 1,624 in 2007. The 2007 figure had been a record, by more than 500, noted Vivek Raman, supervisor of the district’s vector control unit.

Assemblywoman-elect Ellen Spiegel, D-Henderson, suspects local jurisdictions or the state may have to become more aggressive in their approaches, citing recent foreclosure data. In ZIP code 89074, which makes up much of her district, 965 properties are reported to be foreclosed, according to

“That’s scary,” said Spiegel, a member of Green Valley Ranch Community Association’s board. “I’ve heard of other areas (valleywide) that are much worse.”

But some in the real estate industry favor improved communication between them and local governments, versus fines, to address blight.

Mike Krien, president of the National REO Brokers Association and a Las Vegas Valley resident, thinks some cities are fining landowners as a means to raise revenue at a time when budget deficits are common nationwide. He prefers greater teamwork, noting that banks and lending institutions that repossess homes won’t approve spending money to fix homes unless the blight has been documented. If the cities have this proof, they could help expedite the process.

The tag team approach is being pursued, too.

Henderson recently held a forum to facilitate that, and Krien is working to schedule a summit with area homeowners associations in December.

In terms of legislation, Spiegel — at a minimum — proposes allowing homeowners associations to collect all past dues from the banks and lending institutions, versus just six months’ worth that the law now allows. The current law is problematic, HOA leaders say, because associations bear much of the burden to keep up abandoned homes. Accordingly, a community dotted with foreclosures probably will have depleted coffers to attend to the blight.

“If the HOA tried to do the right thing, it would cost $700 to $1,000 to take out the grass per home,” said Richard Cherchio, president of The Parks HOA in the Aliante section of North Las Vegas. “There’s limited enforcement capabilities for us. No teeth whatsoever.”