Manteca’s elected leaders Tuesday may take action that ultimately means the city will divest funds it may have with banks that aren’t cooperating with efforts to stem the flow of residential foreclosures.
The City Council is being asked to take a position on a League of California Cities resolution that urges cities and other public agencies throughout California – including the City of Manteca, Manteca Unified School District, the California Public Employees Retirement System, and South San Joaquin Irrigation District to name a few – to withdraw any money they have with banks that fail to cooperate with foreclosure prevention efforts.
While the resolution is non-binding, should the City Council support it, however, they will have gone on record with a municipal policy decision that would require Finance Director Suzanne Mallory to review the city’s portfolio to make sure the city is complying with the wishes of elected officials.
Even though Manteca is still struggling to cut upwards of $3 million more from the current fiscal year expenses to balance the general fund, it has numerous accounts with substantial money that has been collected for restricted uses and can’t by law be used for other purposes such as covering the general fund deficit.
The investments and cash on hand June 30, 2008 – the ending date of the last city audit – stood at $190.4 million.
That gives California cities acting in unison a lot of clout with banks that aren’t cooperating to help modify loans.
The League resolution is being advanced by the City of Los Angeles. It notes foreclosures are extremely costly to cities increasing law enforcement costs, piling up unpaid water and sewer bills, plus trigger significant losses in property tax revenue.
There were almost a million homes forecloses nationwide in 2008.
Although many banks are now cooperating to modify loans when possible there are some institutions that refuse to do so. Manteca – along with the rest of San Joaquin and Stanislaus counties – was for more than four months in 2008 the foreclosure capital of the United States. While banks have improved, Manteca officials for a longtime were frustrated dealing with criminal activities at abandoned homes going into foreclosure or already taken back by banks. Financial institutions would rarely respond to police complaints making it impossible to enforce trespassing laws and even arrest people caught taking air conditioning units because banks weren’t helping the city establish who owned the homes so complaints could be filed against suspects.
It prompted Manteca to put in place an ordinance that gave the city the power to go after the most egregious banks that neglected maintenance and other issues after the took back ownership of homes. The fines could have gone as high as $100,000. While no bank actually has gotten hit with fines, the existence of the ordinance resulted in banks that hadn’t been cooperating to step up and take care of foreclosed property.
If the council supports the resolution when they meet Tuesday at 7 p.m. at the Civic Center, 1001 W. Center St., it would mark the first time Manteca elected leaders have taken a position to use the clout of city financials for social policy.
Many cities such as Berkeley, Santa Cruz, Santa Monica, and San Francisco to name a few already do that a fairly regular basis. Unlike most of the resolutions regarding public investments adopted by those cities, this one doesn’t address perceived civil rights violations or environmental damage that often prompts Berkeley, as an example, to take positions to steer that city’s funds away from particular banks.
To contact Dennis Wyatt, e-mail email@example.com