Wheeler pauses Hales campaign to foreclose on 'zombie' homes

Mayor says cost, complexity force other solutions but might consider more reforms to program pushed by predecessor.

Portland used the threat of foreclosure to force scofflaw landlords to take responsibility for 10 derelict properties over the past 18 months. But the City Council did not approve any others for foreclosure in all of 2017, despite pledging to routinely review potential new ones.

The reversal happened after former Mayor Charlie Hales — who pushed the council to crack down harder on "zombie" homes — left office. His successor, Mayor Ted Wheeler, doesn't consider foreclosures a high priority.

"The obstacles for government to take away someone's property are formidable," says Wheeler, who took office last January. "It's a very expensive, multiyear process. I'm not sure that's the best use of our resources."

The change essentially leaves the enforcement system where it was before the council approved Hales' June 2016 reforms aimed at cracking down on zombie homes, which often sit empty and are a blight on neighborhoods.

The Bureau of Development Services, which inspects and cites substandard properties for code violations, maintains a list of hundreds of the worst properties in the city. When BDS cannot convince landlords to pay their fines and fix them up, it can refer them to the City Auditor's Office, which tries again.

When the auditor runs out of options, properties can be referred to the council to be approved for foreclosure. If the council agrees, the property is sent to the city treasurer, who schedules a foreclosure auction.

That is how 10 properties were approved for foreclosure since June 2016. Landlords for eight of them paid off the liens before the auctions were set. The ninth was paid off just before the auction. The 10th was paid off after it failed to sell at the first auction but before the second auction was held.

The auditor's office did not refer any additional properties to the council in 2017, despite receiving a list of eight new ones from BDS in February and another eight in October. Instead, the auditor's office has continued working the cases itself — with mixed results.

As of last July, at least 31 unresolved cases were pending in the office. Since then, only eight have either been resolved or on their way to being resolved. None of the eight it received in October are among them.

It's not as though the city doesn't have enough zombie homes to pursue. Depending on who you ask, there are either several hundred or several thousand severely neglected or abandoned homes in Portland. The BDS list totals in the hundreds. The Portland Police Bureau has a list of thousands of troubled properties in East Portland alone.

All of the 16 homes BDS referred to the auditor's office this year are in Southeast and Northeast Portland.

Not all zombie homes are the same. Some are legally occupied, even if they are in disrepair. Others are illegal to live in because of severe code violations, but still attract homeless people and criminals as squatters.

Some are owned by people who are ignoring the fines imposed on them. Others have been repossessed by banks that also are ignoring the fines. And some have been abandoned by their owners, but not yet taken over by their mortgage holders.

Because of the complications, city officials must personally contact the legal owners of all such properties to figure out the circumstances. Some owners can be persuaded to pay up, even if they have to sell the properties. Others win hardship reprieves. Still other owners refuse and drag the process out to the last minute.

The number of properties submitted to the council had been dropping even before Hales left office. The council approved five homes for foreclosure on June 15, 2016, and another five two weeks later. The number dropped to four the following Sept. 28. And only one was submitted for approval on Dec. 22, 2016, the last time the council was presented with a new list.

And as Wheeler correctly notes, just because the landlords paid off the liens doesn't mean the homes were torn down, fixed up or replaced with a new home. It just means the inspection and penalty process can start all over.

Site visits by The Portland Tribune show that most of the properties approved for foreclosure have, in fact, been fixed up or replaced with new homes, however. And the city has collected hundreds of thousands of dollars in fines and fees from the landlords.

Although Wheeler says changes may be proposed to hasten the process, he still asks whether city costs can't be better spent by increasing security on the worst offenders.

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