Threat to torpedo Richmond's plan to help home owners through eminent domain dodged, for now

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Early yet
Photo by Joe Fitzgerald Rodriguez
The crowd gathers at the Richmond city council meeting a full hour before it starts. By the time of the meeting all the seats on the floor were filled, and then some.

Last night, Richmond’s controversial plan for preventing home foreclosures using eminent domain was almost torpedoed. The stage was the regular Richmond City Council meeting, where its members fought a drag out, bare-knuckle fight with at least three hundred Richmond residents in both corners of the issue crowding the auditorium.

Last night, advocates for city intervention against the banks won.

The Richmond City Council voted 5-2 against a resolution to rescind the city’s offer to purchase 624 underwater mortgages and halt any effort by the city to seize those mortgages through eminent domain

A separate resolution by Mayor Gayle McLaughlin to establish a joint powers authority, uniting cities to battle litigation against the eminent domain plan, also passed. 

The resolution against the plan was called for by Vice Mayor Courtland “Corky” Boozé and Councilmember Nathaniel Bates, who were the only two votes supporting it. With 51 percent of Richmond’s houses saddled with underwater mortgages, the city is facing a cascade of issues: blight, increased crime, and a lower tax base that is crippling their government. This led McLaughlin to partner with an outside firm to potentially seize mortgages with eminent domain, allowing homeowners to pay off their mortgages to the city at lower rates and avoid foreclosure.

Boozé and Bates said that with Wells Fargo suing the city to halt the plan, the city risks bankruptcy. The effort to seize mortgages through eminent domain, they said, puts nothing less than Richmond’s financial solvency on the line. 

Nobody disagreed with them. 

“My vote is not supposed to be if (Wall Street investors) are a bunch of jerks and I want to stick it to them,” Councilmember Jim Rogers said to the audience. “What I am going to say is that a 1 percent chance of bankruptcy from this program is a deal breaker for me.”

After laying off a third of the government’s workforce in lean economic years, Rogers has reason to worry. And at the meeting the main concern was Mortgage Resolution Partners, the group that partnered with Richmond to hatch the eminent domain plan in the first place. Could MRP financially back the city if Richmond lost a lawsuit worth hundreds of millions?

The city’s manager, Bill Lindsay, laid out the risks for those in the auditorium.

First of all because no city has ever tried this before, he said, no liability insurance exists for this kind of work, which MRP has acknowledged. “If you believe the potential loss (of a lawsuit) is catastrophic, its important to acknowledge thats an issue,” he said.

He also said it was tough for the city go it alone as a single entity, explaining the need for a joint powers authority, which would build a coalition of cities against Wells Fargo and other litigants. 

State law requires a supermajority of the council, five members, to back any eminent domain action and only at the time that it would take place, he said. 

Hours of back and forth passed between the city manager and Boozé who, after some arguing, frustratedly asked the audience, “Are 110,000 people worth fighting Wall Street for?”

The crowd roared their answer immediately: “YES!” 

The ideological split of the audience was clear as day: Eminent domain supporters wore yellow shirts with a logo of the activist group Alliance of Californians for Community Empowerment, and those against wore red shirts branded “Stop Investor Greed.”

They divided the gym like bitter parties of a political bride and groom. 

Those sporting the red shirts were mostly from the real estate industry, and in public comment they generally expressed that if someone were to lose their home, well, “so what?”

Lisa Johnson, clad in red, said, “My house is an investment, not a right.” 

A representative from Richmond’s Council of Industries asked the mayor to reconsider the eminent domain plan, and to rescind the initiative. 

Jerry Feagley, whose Feagley Realtors has sold homes since 1966, said the plan risks damaging all of Richmond’s ability to get credit. He was a seemingly mild-mannered man who is exactly who you’d picture if you think of a businessman from the ‘50s, grey suit and all.  “If this would go into effect, this would change loans in the entire country,” he said, passionately. 

Well, that’s kind of the idea, the supporters countered. 

“I was at the March on Washington with Martin Luther King 50 years ago, yes, I’m that old” said one woman. She was bent over with age but spoke with volume. “That’s exactly what we have to do. We’re going to have to met power with power and challenge the status quo.”

Well over 50 supporters came to speak at the podium. The meeting started at 7pm, and stretched on well past one in the morning. If there was one central theme to their sentiments, it was this: Richmond has hit rock bottom, and now is the time to fight back.

Councilmember Butt put it in plain terms. “What we’re voting for is a giant game of chicken, and it’s clear two of my colleagues have blinked,” he said, referring to Boozé and Bates. 

“I’m not blinking,” he said.

The council voted, and amid the turmoil and arguing and anger, the Boozé and Bates measure to scuttle the eminent domain plan was scrapped.

Having already lost once that night, Bates did not fare well when time came to vote on forming a coalition of cities to battle litigation, called a joint powers authority. El Monte may be the first to join, Mayor McLaughlin said, which would help homeowners in need who are often people of color.

Bates countered that McLaughlin should look out for “her people” and not try to use “his people” as a front for her legislation. “You don’t speak for my community,” he said, referring to African Americans.

When another black council member, Jovanka Beckles, spoke up to thank her “white brothers and sisters” for joining in a fight for justice, Bates was uncompromising.

“You are not African American,” he told her. 

Boozé also had words for the other dissenting African American Councilmember Jael Myrick. “One day you’ll have to stand up and be black,” he said.

Mayor McLaughlin’s measure to form a joint power authority then passed 4-3, with council members Boozé, Bates and Rogers dissenting. 

The last remaining supporters waved their yellow flags and the dwindling crowd clad in yellow shirts left victorious, for now.