May 22, 2014
No comments

On Tuesday, Richmond City Council for once engaged in a healthy debate about an important subject facing the city.

The debate came before a council decision on whether the city should renew its agreement with Mortgage Resolution Partners [MRP] to implement the Richmond CARES program, which has been stalled for several months.

The controversial and nationally-known CARES program would have the city of Richmond acquire more than 600 underwater mortgages at fair market value, possibly using eminent domain powers if creditors refuse to sell. The mortgages would then be reduced to less than the value of the home so that homeowners can afford them and remain in their homes. The plan, supporters say, would stabilize neighborhoods and the local economy. It was proposed by Mayor Gayle McLaughlin, who says she’s standing up for victims of a housing crisis that was caused by the banks and Wall Street. While everyone on council agrees that many underwater homeowners need help, some are almost certain the CARES program is illegal, won’t help very many people, and would lead to a lawsuit that could bankrupt the city.

The mayor insists the city will be financially and legally protected, especially when Richmond joins forces with other cities on the program to form a Joint Powers Authority (JPA) that would offer greater legal authority and protection. Opponents, however, contend that no other city has signed on to the program, and that the already financially struggling Richmond is taking a huge risk over a program that won’t help very many people.

Following stern comments from Councilmember Tom Butt (as you will read below), the council ended up delaying the vote by 30 days on whether to nix the MRP agreement.

Disclosure: For the purpose of brevity, The Richmond Standard shortened comments to some extent, omitting for instance comments from members that were unrelated to the topic or were attacks on fellow members (thankfully, there were only a few). The comments below are published in the order they were stated at Tuesday’s meeting:


Vice Mayor Jovanka Beckles

Vice Mayor Jovanka Beckles: (supporter of eminent domain plan)

“I cannot [support canceling the agreement with MRP] because I respect our residents. I respect the hundreds of people who came out here, we had standing room only on December 17, to move this program forward, and that happened. And to totally reverse that now would be so incredibly disrespectful…to our residents. Eduardo Martinez used a good metaphor, it’s perfect, “this seed has been planted and it is growing. Why would we want to uproot it before it has the time to blossom? [the vice mayor also quoted a Compton DJ who interviewed her about Richmond CARES and stated, ‘There’s a revolution going on in Richmond.’]. And I’m very proud of that. There is a revolution going on in Richmond. [The vice mayor also mentioned Compton officials are calling Richmond courageous for moving forward with Richmond CARES.] We are at the forefront of this. People are watching. We can’t uproot this now. I think they will get their courage from seeing us win this. From having a huge win over the injustice that occurred to thousands and thousands of people during the whole housing debacle where home prices were ridiculously inflated for the sake of greed. I think the mayor was alluding to this, but we are having talks with [cities] who are interested in a JPA. There are cities I believe that are keeping their fingers cross too see if Richmond….will be able to follow through with that courage….We were elected to represent the people, and if the people are saying please give this a chance, then that’s what we need to do. Give it a chance, and let’s make the nation proud, all of those people who are watching what we’re doing in Richmond. And let’s give hope to the people in Richmond whose homes are underwater. Let’s give them help.”


Councilman Jael Myrick

Councilman Jael Myrick: (supporter)

“I did say I don’t want Richmond to be a royal taster on this, but I’ve also said I believed we should go forward responsibly. And that’s so far what we have done. Now, at the point we are today, the only reason we would reverse course since December…is if we saw some major impact that has been negative as the result of the eminent domain plan. [Myrick quoted a March news article stating city’s bond rating was upgraded]. So the only difference between today and where we voted on this December 17 is that the city is actually in a stronger place. The city is better off in terms of its bonding. So there’s not a solid reason for us to say we’ve got to give up this program….The only other alternative we’ve received so far [are] deals with actual properties, but they don’t do anything for the people in those properties…..At the end of the day, this program has given people hope. The reason that’s important, is a lot of these people were thinking about leaving Richmond, abandoning Richmond and going somewhere else, but they’re staying here. That has a real effect…the city is pulling for them, and it’s making them pull for the city. Where we are at today, there’s no reason we would abandon this program. [he went on to say Richmond should pursue the JPA path]. The fact that another city hasn’t joined us yet doesn’t mean it won’t work.


Councilman Tom Butt

Councilman Tom Butt: (on the fence)

“I do believe that Wall Street and the banks caused the crisis that made this happen. I believe that implementing a program like this would be justice served. I believe it’s a brilliant and creative approach to trying to right a wrong. But the flipside of that is it’s become clear that we cannot implement this program with City Council because we don’t have the five votes to do it. So Plan B was to enter into a Joint Powers Agreement with some other city, and presumably the Joint Powers Authority could muster the super majority to enter into an eminent domain action. The problem is nobody’s come forward. I’ve had several conversation with Mr. Gluckstern on MRP over the last couple of months. Every time I have a conversation with him, he promises we’re two weeks away…in two weeks, we’re going to have a partner. About a month ago he told me the city that’s going to do it is Coachella…he says give me two weeks. I’ve been Googling Coachella and eminent domain for the last month, nothing pops up. I called the [Coachella] mayor today, he’s pretty hard to track down….[mayor didn’t return Butt’s call]. I’m going to continue to support this for maybe another 30 days and then I’m out of here. I just don’t think it’s going to happen. And if it does happen, it’s going to take two years minimum to implement it. By that time, who knows what’s going to happen.

Councilman Jim Rogers: (opponent) [no photo immediately available]

“There was something really important that changed back in August. And what changed is really simple: MRP came up with a new game plan. The first game plan they talked to me about was, OK, the city is worried about the promised $100, $200 million lawsuit from the [financial institutions following implementation of Richmond CARES], and we got a game plan. The game plan is to go out and buy insurance. Somewhere around August or September, they said Jim, we have a new game plan. The new game plan is we’re going to talk you into the fact that there’s no risk. And I said wait a minute, if there is no risk, and if this is a big program, then why can’t you buy insurance for it?…They gave me an answer about how supposedly insurance companies wouldn’t do it because it wouldn’t be reasonable, they had them over a barrel, etcetera etcetera. I didn’t buy it then, I don’t buy it now…I went through the very unpleasant experience a number of years ago of having to lay off about a third of the city workforce…I don’t want to do that again. That was brutal. The worst thing easily I’ve had to do in public office….when people talk about the fact we need to help out people who have been foreclosed on, I agree. That’s important, and that’s why I was on board originally when it looked like a free ride. But let’s drill down the people who we are talking about here. We are not talking about the people on the ropes who are about to be foreclosed on. We started talking about a group of 600 people, and then we passed a resolution saying we didn’t want to mess around with people who had more expensive homes. So now we’re probably down to about 300 to 400. Of them, a majority of those people [who would end up qualifying to benefit from the eminent domain plan] are actually not going to default because they are not the group of people who are at risk. They are cherry-picked…you have to [provide this benefit] to somebody with good credit, a job, yada yada. At the end of the day, this program helps maybe 20 to 25 people. That’s a good thing, but how does it compare to even a small chance of bankrupting the city?…I respect the energy, the passion and idealism. I was one of you originally. [Rogers goes on to state that he’s a progressive and doesn’t want to jeopardize the progress the city has made over a program that helps 25 to 50 people that would happen in two years and only after the lawsuit. He also stated that unbiased legal experts say the program is probably illegal].


Councilmember Corky Booze

Councilmember Corky Booze: (opponent)

I’m the only person with common sense who wouldn’t go for this. I cannot waste your money on this. I told you from day one this was a sham. You folks at home…ask yourself this question: Why wouldn’t anybody from the United States join? I talked to San Pablo City Council and they said no way did they give any indication they would [join the JPA]. This is ridiculous. I got to side with Councilmember Rogers. The [Richmond Progressive Alliance] don’t care…all they care about is getting their way. Councilmember Butt, of all people, if he’s skeptical, my God! Tom Butt doesn’t go for not good business deals. When are you finally going to say hey folks, this is not working?


Mayor Gayle McLaughlin

Mayor Gayle McLaughlin: (supporter)

“Let me start our by reiterating the facts. This program will not cost one penny of taxpayer money. This program is totally paid for within the context of the program that is being implemented, with a private partner who has lined up the investors. That’s one of the agreed to principles of this program, that not one penny of city money will be used, including the legal costs. The legal costs are such that we are fully indemnified by MRP. And in a JPA, the JPA would be fully indemnified….There was recently a report released by the [UC Berkeley] HAAS School of Business…it showcased that many cities are being bypassed during this so-called economic recovery, and Richmond of course was on that list. Many cities are looking into join Richmond [on the eminent domain plan]: Irvington and Newark, New Jersey. New York is considering this. Seattle, Minneapolis. Many other cities that I don’t have a list of right now. In California we have the city of San Francisco, San Pablo, Vallejo, Antioch, two cities form Southern California, and also Fairfax and Berkeley. So we’re at the point where we’re discussing this with councilmembers, staff; attorneys are talking with each other. We need to continue those discussions. We have a draft Joint Powers Agreement worked out….[making sure all participating cities agree to the language. The mayor also stated experts expect foreclosures to increase this year]. Legal issues are being dealt with. The city or cities will not be held liable [for eminent domain action]. The underwater crisis is not going away. It’s just not going away. We have homes in Richmond where the home value is half the amount of what the mortgage is. That’s outrageous. People are in the position of acting like renters because they know they will never pay off this huge mortgage. So people are holding on by their fingernails, but at what expense? And if they walk away and go into foreclosure, their credit goes away as well. That’ s just not fair. This is a question of hope. It’s a question of the American dream. People have a right to have a little piece of land to call their own….the fact that the banks and Wall Street did some evil dealings, and that’s what they did, is not right and we have a responsibility to correct what we can.”