About a month ago an eviction ordinance was passed by the outgoing Merced City Council that jeopardizes personal property rights. In tenant-occupied properties the ordinance severely hinders new owners of foreclosed properties from making the necessary repairs to sell it to families who are first-time buyers. Fortunately, it was brought back for reconsideration.
We commend the City Council for bringing this important issue back for discussion so community members could openly address the concerns and the negative impact it will have on Merced's housing market and property rights.
We have all directly or indirectly been affected by this foreclosure crisis and sympathize with tenants. The foreclosure epidemic gained strength four years ago when banks owned 30 percent of the houses on the market. Fortunately, today only 18 percent of the market are bank-owned homes. We are beginning to see the light at the end of the tunnel.
Yet this ordinance will dim that glimmer of hope.
Local companies and individuals buy these distressed properties and immediately start the job of remodeling and preparing them for market. These investors make the necessary improvements and make them available for local deserving first-time home buyers. Without the necessary improvements, the first-time home buyer may not be able to obtain financing because of the condition of the property and lending requirements.
These improvements are one of the reasons the unemployment rate in Merced isn't worse. Investors are hiring local painters, local flooring companies, local cabinetmakers and local contractors to make the necessary repairs as well as buying materials at local stores.
In 2011, there were an estimated 218 properties bought as a result of foreclosure activity. The average refurhishing costs are between $15,000 to $20,000. This totals $3.2 million to $4.3 million, which is pumped into our local economy. Most investors that have been following this ordinance have stated that they will invest in other communities because of fear and the risk associated with this ordinance.
Tenants' lawyers will have legal leverage to use against those who want to remodel the residence. With our local market fínally starting to show signs of life and recovery, this ordinance will only delay our recovery and bring neighborhood revitalization to a standstill. It's well-known that the key to national economic recovery begins with the housing industry
As concerned citizens it's very disappointing to have another outside lobbying group come into our community to tell us how to run our city. This San Francisco-based lobbying group is funded by lawyers from the Bay Area who use these "ordinances" to sue property owners. This ordinance could obligate Merced property owners to pay thousands of dollars to lawyers after the filing of frivolous lawsuits. The ordinance states that only the tenant's lawyer can collect attorney fees, making this an unfair "one-way" ordinance. There are lawyer websites that advertise bringing about these kinds of lawsuits, which will, in turn, take away thousands of dollars from local businesses. Is this what we want in Merced? Can we afford to lose local investors and the positive impact they have on our local economy?
This ordinance will also promote fraud. We are already seeing cases of fraud in our community even before the ordinance goes into effect. The ordinance includes "oral or implied" leases in the definition of "rental agreement." This ambiguity will only increase the instances of fraud and further hinder our recovery.
This ordinance, written in San Francisco, is a step toward "rent control." Merced is not Berkeley, nor are we like San Francisco's housing market. Our community is still developing and growing. Rental housing is readily available and competitively priced. We do not need San Francisco laws. This ordinance will continue to burden our housing market with more regulations. Other foreseeable complications are the increasing number of neighborhoods that will decline, the loss of local jobs and increasing litigation.
The federal Tenant's Protection Act of 2009 provides adequate protection for tenants in foreclosed homes and offers displaced tenants fair compensation for their relocation inconvenience in the form of Cash-For-Keys.
This eviction ordinance is an attack on private property rights and on the American dream of homeownership. The Merced County Association of Realtors continues to stay focused on this ongoing issue affecting our community.
The authors are the past and current presidents of the Merced County Association of Realtors.
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