OAKLAND -- Community activists and City Council members on a neighborhood bus tour denounced the scourge of urban blight, attacking banks and commercial property owners as negligent landlords and pushing for urgent reforms.
"The banks have been using Oakland as a dumping ground," said Shirley Burnell, a West Oakland resident and volunteer at the Alliance of Californians for Community Empowerment, or ACE, which organized a two-hour bus tour Thursday to see the damage up close. "The banks are responsible for creating this blight, so they need to be responsible for cleaning it up."
There may be as many as 6,000 foreclosed properties in Oakland, particularly in the flatlands, parts of which are a patchwork of vacant, bank-owned or up-for-auction homes where dumping is rife. Neighbors are fed up, and say the vacancies soon lead to trouble as squatters, prostitutes, drug dealers and animal vermin take up residence instead.
"One blighted house infests the whole neighborhood," said Beverly Williams, who has been patrolling Oakland's streets looking for blight for the past 18 years, "It's a war for the neighborhoods."
A California bill passed in January 2010 aims to hold banks and property owners more accountable by leveraging $1,000 daily fines against owners if the blighted properties are not cleaned up within 45 days of being notified. Before that, banks had little incentive to address the problem at all.
But City Council members, neighbors and activists say the bill has been largely ignored. They claim banks have successfully circumvented the new law by passing the expenses on to buyers instead through liens and by increasing the purchase price.
"Everyone has been too tolerant of the banks," said Councilmember Desley Brooks, who represents the Eastmont-Seminary district, who spoke in the driveway of a blighted property in the 1400 block of 88th Avenue, where trash was strewed along the ground, and clear signs of illegal dumping were visible in the backyard. "We need to make this work, not for the banks, but for the people who live here."
The city has taken some steps to pressure banks to do more. In 2007, Oakland passed an ordinance demanding that banks restructure foreclosed loans. Two years later, it forced the banks to provide the numbers of foreclosures they processed, and banks received hefty fines for not registering vacant buildings.
But Councilmember Jane Brunner, who represents North Oakland, said it hasn't been enough, and that the city still hasn't figured out how to prevent banks from shuffling the additional costs on to future buyers. At the end of the day, she said, "the banks don't really care if these houses sell or not."
"We need to figure out how to go after the banks," she said.
The foreclosure crisis is nowhere near ending. Fully 10 percent of single family homes in Oakland are foreclosed, far more than most states, Brunner said. And last year, powerful banks with a local presence, such as Chase and Wells Fargo, reset loans on some 1,600 homes across the city.
Ray Derania, deputy director of Oakland's Community and Economic Development Agency, said the vast majority of banks do, in fact, pay their fines on time -- but they only do so once they've received a notice of blight, which means the properties can go unattended for weeks, if not months, because the city can't pay for a comprehensive survey to assess the scope of the problem.
"Oakland has had a problem with blight for years," said Derania. "But the foreclosed properties have exacerbated the problem, no doubt."
Other cities have devised schemes that seem to be working, including Richmond, which reduces the fines if the banks maintain their properties in a timely manner. So far, however, Oakland's city managers haven't found the right leverage tool, and the problem persists.
"The linchpin now is finding a way to structure these fines so that the banks can't pass on the costs to the new owners," said Brunner.