San Francisco Weighs Joining Richmond to Help 'Underwater' Homeowners

Members of the San Francisco Board of Supervisors say they want the city to join Richmond in a controversial effort to help homeowners facing foreclosure. In a program facing legal threats and stalled by a City Council minority, Richmond wants to use its power of eminent domain to seize "underwater" homes — properties for which mortgage holders owe more than the homes are currently worth.

San Francisco Supervisor John Avalos says he's working with the city attorney's office to draft legislation to create a joint powers authority with Richmond that could help deflect lawsuit threats and allow the program to go ahead. At the Board of Supervisors meeting Tuesday, Avalos postponed a vote on a resolution commending Richmond for its eminent domain program and declaring San Francisco's intention to sign on to a joint powers authority. Co-sponsors include Supervisors David Campos, Jane Kim and Eric Mar.

Under Richmond's plan, the city would work with an outside investment firm to take over as many as 600 underwater properties or buy them at current market value, and then grant new, affordable mortgages. The banking and real estate industries and federal home loan authorities oppose the plan. Supporters of the plan on the Richmond City Council, which voted to set up the program last year, have been unable to get the supermajority of members they'd need to actually go ahead with seizing properties. The main worry expressed by opponents: the city's possible liability if it's sued.

But the program might proceed if other cities sign on to the plan — especially one with the financial clout of San Francisco.

"San Francisco joining that effort, especially when we are a center of financial institutions, would send a strong message that creating these tools to protect households against defaults and foreclosures is essential," Avalos said Wednesday.

Avalos said the program would also help people San Francisco residents. He hopes to introduce the legislation to the board by the end of the month.

"This will be an enormous boon for a lot of working-class communities of color," he said. "We have a huge out-migration of African-Americans in San Francisco, and many African-American households see this as a real strong tool that will enable them to stay in the city."

Richmond City Councilman Tom Butt has supported the eminent domain plan from the beginning -- he calls it a creative and brilliant solution to the city's housing problems. But he says he's not expecting San Francisco or any other city to join Richmond soon.

"We've been two weeks away from having a partner for the last nine months," he said. "So every time some city takes an interest in this, I sort of take it with a grain of salt. It'd be great if it happened but it would also, I think, surprise me."

Butt said even if another city signs on immediately, unresolved legal issues mean it could take years before eminent domain could bail out a single household.