July 16, 2011 (San Diego) -- Home foreclosures in the City of San Diego are costing local governments hundreds of millions of dollars, in addition to billions lost by neighboring homeowners, a study by the Center on Policy Initiatives shows.
The report, Foreclosure: the Cost Communities Pay, projects almost 57,000 foreclosures in San Diego over five years, and recommends the City take action to hold banks accountable for the resulting costs.
"The foreclosure crisis is clearly devastating to families who lose their homes, but it also has a huge financial impact on neighborhoods and local governments," said CPI Research and Policy Lead Corinne Wilson, author of the report. "We need to find solutions to recover some of those costs from the banks that cause the problems."
When banks leave homes vacant and in disrepair, neighboring property values decline, property tax revenue is lost and the city must pay for upkeep, code enforcement and police services.
A single foreclosure can cost local governments $5,000 - $34,000 in maintenance, inspection fees, public safety calls and other services. In San Diego, those costs have totaled between $134 million and $855 million over the five years since the crisis began in 2008, the study found.
In addition, the lost property tax revenue from San Diego foreclosures is estimated at $117 million, and the combined wealth lost by owners of foreclosed homes and neighboring homes is more than $19 billion.
At a press conference, Barrio Logan resident Gabriela Castellanos said the half-dozen foreclosed houses on her street create a fire hazard with overgrown weeds, are infested with rats and roaches, and sometimes are vandalized or used for prostitution and drug abuse.
"This is a very serious crisis," said Castellanos, whose four young grandchildren live in the neighborhood. "The banks have a big responsibility. If they close these houses, they have to take care of these things."
The report provides data on lost home value and costs for all zip codes in the city. It recommends remedies that include holding banks accountable for those neglected properties, with fines or penalties to cover the costs generated by nuisance properties.
The 4-page report is available on CPI's website, at www.onlinecpi.org/