Portland votes on foreclosures for 1st time in 50 years


PORTLAND, Ore. (AP) — The Portland City Council voted Wednesday to move forward with a plan to foreclose on so-called “zombie homes” for the first time in 50 years as the city grapples with a swelling population and skyrocketing home costs that are locking new homeowners out of the market.

Commissioners and the mayor voted 4-0 in favor of the plan, with one member absent. The vote targets five of the city’s worst abandoned properties, the first part of a long-term plan to free up housing in an overheated market while clearing out squatters who have plagued developing neighborhoods outside the city’s hip core for years. They also voted to alter city code so Portland can sell a foreclosed property for its market value and not just for what’s owed in liens.

“What they are doing is cynically manipulating the system and the real estate market to enjoy the rise of property values, but leave the problems to the city and their neighbors,” Mayor Charlies Hales said of the absentee owners before the vote. “It’s a necessity that you take care of your property and in this real estate market it’s quite possible to do so. So this is the right thing to do.”

Homeowners who live next to some of the properties applauded the move, saying the blighted homes had taken a huge toll on their communities.

“I tried very desperately to get ahold of the owner, the bank, somebody who was in charge of the house. A lot of people have tried to find them,” said Sally Bowman, a homeowner. “Thank you very much from the bottom of my heart . for doing something about this problem.”

The idea of cities buying up blighted properties isn’t new, and Portland looked to metropolises like Baltimore or Detroit while devising its plan. But unlike those cities, which were hit hard by the recession, Portland is bursting with newcomers and housing demand has far outstripped supply. Portland home prices are going up 11 percent year over year and 1,000 new people move to the city every month, Hales said.

Portland hasn’t foreclosed on anyone since 1965, when a single mother sued after officials took her home over a $28 sidewalk nuisance fee. That episode chastened the city, which reversed course so dramatically that Hales wasn’t even aware it had a foreclosure manager on its staff.

In the five decades since, Portland has essentially operated as a collections agency, putting delinquent owners on payment plans for unpaid liens and boarding up vacant homes.

The sharp policy shift, while a boon for frustrated neighbors, has some residents nervous about potential abuses of power. The city will only take on documented vacant and abandoned homes, but some wonder what would prevent the city from foreclosing on any property that generates too many complaints.

One opponent who spoke at the meeting called the city a “vulture” taking advantage of the most vulnerable and three people booed and shouted at Hales from the gallery as the vote proceeded.

In the Lents neighborhood, where some “zombie homes” are on the city’s list, 1,000 homes were razed through eminent domain for the construction of Interstate 205 in the 1980s and that suspicion lingers.

In these narrow blocks of aging, post-World War II homes, Portland’s national reputation as a trendy and edgy mecca seems lost amid vacant lots overrun with weeds, sagging bungalows and chain link fences.

“In a neighborhood like ours, it’s going to be a sort of divisive issue,” said Cora Lee Potter, land use chair for the Lents Neighborhood Association on the city’s far eastern edge. “Everywhere you see I-205, there used to be four or five city blocks of housing there.”

Chad Stover, a livability project manager on the mayor’s staff, emphasized that the city wasn’t taking action to make profit, but to restore neighborhoods and bolster housing supply. There are probably hundreds of vacant and abandoned homes citywide that could eventually qualify, he said.

“We are certainly cognizant of anything that pertains to housing right now in the city — and always will be — and the specific homes we’re focusing on are the vacant and abandoned homes,” he said. “It’s very important that we say that over and over again. We’re not going after the ones that have anyone living in them.”

The mayor’s office has passed a list of 25 or 30 additional homes to the foreclosure manager for review after working with police and residents.

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This story has been corrected to show the Portland mayor’s last name is Hales, not Hale.