Las Vegas Council approves foreclosure ordinance

The City Council voted unanimously for an ordinance that requires banks to list empty, foreclosed properties on a registry and contains misdemeanor penalties for allowing a property to fall into disrepair.

The ordinance, sponsored by Councilman Steve Ross, is an attempt to reduce blight associated with vacant homes and commercial properties.

“This council and this community is tired of these blighted buildings,” Mayor Carolyn Goodman said.

Bill Uffelman, president of the Nevada Bankers Association, said he supports the efforts to reduce blight but objected to the misdemeanor penalties, which could include fines or jail time.

“No bank that is a member of the Nevada Bankers Association has a senior VP who is in charge of going to jail,” Uffelman said. “It isn’t going to work.”

SPARKED BY BLIGHTED HOUSES

The foreclosure ordinance has been in the works for months.

Ross first proposed it in October as a response to the high number of blighted properties in his Ward 6 and throughout the city.

Chris Knight, director of the department of building and safety, said that as the foreclosure epicenter of the United States, Las Vegas is burdened with a high number of houses with green pools, broken windows, overgrown weeds and vandalism.

The blight is an eyesore for neighbors, can attract crime and can diminish the value of nearby properties.

Knight said that in August, a month city officials used as a sample, there were more than 320 newly vacant lender- or bank-owned homes in the city.

At that rate, there would be nearly 4,000 such houses annually. 

According to information provided at the meeting, Las Vegas is home to about 28 percent of the estimated 100,000 distressed homes in Southern Nevada.

“That clearly indicates the issue of foreclosures is not going away anytime soon,” Knight said. “This could be a 10-year problem.”

All homes, those in foreclosure and those in good standing, are subject to residential landscaping and maintenance codes. When codes are violated, homeowners can be assessed. If the assessments aren’t paid, then the city can hire companies to drain a foul pool or remove overgrown weeds with the cost passed along to the owner.

If the costs and penalties aren’t paid, the city puts a lien on the house that must be paid or forgiven before someone else can buy it.

The City Council regularly hears from would-be homeowners who find a house they like only to learn it has thousands, or even tens of thousands, of dollars in liens against it because the previous owners didn’t pay maintenance assessments.

The ordinance would reduce such instances because the registry would track empty bank-owned properties, and the stiffer penalties would compel banks to care for the houses.

BANKS: city ASKING FOR TROUBLE

But Uffelman said many of the problems with vacant properties occur after the homeowner stops making payments but before the bank takes ownership, a period that can last more than 400 days.

He said banks could be in a position to be responsible to care for properties they don’t legally own.

Uffelman also said landscaping standards that require irrigation could force banks to maintain active electric and water service at vacant properties, which might result in more problems by encouraging squatters.

“It is very difficult complying with this ordinance. That is really asking for trouble,” he said.

Uffelman didn’t find much sympathy on the council for concerns from banks, who many blame for the dysfunctional housing market that crashed and resulted in the foreclosure crisis and broader recession.

Goodman said the potential misdemeanor penalty is needed to give the ordinance teeth.

Knight said under the ordinance, banks would have 15 days after a notice of default to inspect a property to determine whether it is vacant. If it is vacant, they will have 10 days to list it on a city registry at a cost of $200.

The property then needs to be maintained in compliance with health and safety codes.

If a bank or lender fails to comply, it would get a notice, then a citation and, if it doesn’t comply, a possible misdemeanor citation, which could result in a $1,000 fine or six months in jail.

Councilwoman Lois Tarkanian said the ordinance wouldn’t have been needed had banks, lenders and other institutions done a better job cooperating with the city’s efforts to maintain neighborhoods.

“They treated us with disrespect, they treated the citizens with disrespect, so we said we have to do something,” Tarkanian said.

“We’ve tried to correct this problem and have not had help from the banks. We’re moving in the direction we need to.”

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-229-6435.