Phoenix seems to be doing it better.
He now has a code enforcement team of just five people responsible for the entire city of Los Angeles, which has a population of nearly four million.
… cities are forced to pay contractors to mow unkempt lawns, drain fetid swimming pools and board up broken windows.
Then, when the bank finally comes to sell the properties, they bargain down the liens. Cities are desperate to see owners in the homes and thus are more than willing to cut deals. Liens worth in excess of $100,000 are routinely reduced to as little as $2,000, ….
Patrick Ravenstein, a code enforcement official in Phoenix, Arizona, said he had more than 50 inspectors who conduct about 16,000 inspections a month to levy and enforce fines on blighted, bank-owned properties.
He said if banks fail to respond, they are taken to court. Either way, Ravenstein said, about 90 percent of such properties have ended up repaired and maintained.
“We have had significant cooperation from the banks,” he said.
A little editorializing/speculating here: It must be cost-effective for Phoenix to be doing this, right? Aren’t the overall societal costs too huge for Los Angeles not to be doing what Phoenix is doing?
Of course, the ultimate costs are borne by the whole society, the consumers. Even the top executives of the banks involved are still consumers and have to live within society and bear costs and problems that could be (could have been) avoided via better planning and oversight rather than looking no more than at the next quarter’s so-called bottom line.
Also, which insurance companies are covering the banks that own the properties but don’t pay for the upkeep? If Los Angeles is doing next to nothing due to too small a budget for these things, then the insurance carriers will not be leaned upon or will not in turn lean upon the banks via non-renewals of certain policy types involved and via higher premiums, etc.
It’s a very complicated issue, but the banks really need to move the properties rather than holding out for rising values. Starting the moving process would stimulate the economy and cause values and employment to rise.
Perhaps they should approach local neighborhoods to form buying cooperatives to takeover, fix-up, and then rent out the now decaying properties. Properties beyond repair could be demolished and the land used for urban farming, parks, or new construction when things are looking up enough. Anything would be better than nothing — just waiting.
The banks could even be part-owners of the co-ops. There’s money in it somewhere if they’ll just look. Maybe they should just do the right thing first, and the money will follow.