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TRIBUNE PHOTO: ADAM WICKHAM - Portland police officer Joseph Young checks on a vacant eastside home. Police have a list of 430 abandoned eastside homes, but city foreclosure officials say they havent seen it.A critical city government meeting to address Portland’s plague of abandoned homes took place two weeks ago. Yet Portland Mayor Charlie Hales’ staff — the very people spearheading efforts to get 430 abandoned, “zombie” homes back in use for housing — were not allowed to participate.

Nor were representatives of city Commissioner Dan Saltzman, whose Bureau of Development Services inspects abandoned homes and places liens against them.

City officials say outdated Portland ordinances present obstacles to a coherent foreclosure process that could turn abandoned homes into productive housing, and reduce blights in neighborhoods that attract illegal squatters. But there may be no more significant roadblock than the turf wars and siloed agendas that have kept different city agencies from working together to solve the abandoned homes problem.

The Thursday meeting involved the city auditor’s Collections Committee. That committee was convened to decide what to do with three abandoned homes that city agencies had determined are among the worst of the worst. Police have grown tired of sending officers to check whether squatters have returned to the abandoned homes. City liens on the derelict properties had reached close to six figures, as utility bills went unpaid and fines for zoning code nuisance violations piled one on top of another.

In fact, the homes the committee was to consider were identified by the mayor’s office, which compiled a list of the city’s 32 worst abandoned homes after conversations with police and the BDS.

The list was turned over to the city auditor’s office late last year. Marco Maciel, the auditor’s foreclosure manager, was given the difficult task of finding the actual owner of each property. But as of last week, the foreclosure manager still was unable to determine ownership of 24 of the 32 homes.

Avoiding conflict

The auditor decided that to prevent a potential conflict of

interest, the committee, which determines lien adjustments, should not include officials who will decide which properties get foreclosed, according to Sarah Landis, chief deputy in the auditor’s office.

Matt Grumm, policy adviser for Saltzman, says Landis’ decision not to allow members of Hales’ and Saltzman’s staff to participate in the Collections Committee process was a political, not a legal decision, and the wrong one.

Regardless, the Collections Committee dispute is only one example of the siloed approach that has kept the city from efficiently addressing the complicated problem of abandoned homes, says Chad Stover, project manager for Hales.

Police get calls from upset neighbors and visit abandoned houses. The BDS inspects those houses for nuisance code violations. The city auditor’s office is in charge of lien collections, and, according to city ordinance, of presenting to the City Council a list of properties to consider for foreclosure. But it has never presented any, and the city hasn’t foreclosed on anyone since 1965.

The mayor’s office is trying to take the lead in refashioning city policy to address abandoned homes. But in many instances, these different agencies aren’t talking to one another, and they certainly aren’t working with one another, Stover admits.

“Part of what we’ve discovered is a disconnect within the city,” Stover says.

Problems highlighted in 2012

Such problems are not new. A 2012 outside audit of the city’s lien and foreclosure processes found them to be “complex, difficult to follow, fragmented, and duplicative. Varying objectives among bureaus, differing views of roles and responsibilities, and disputes between the Revenue Bureau and the city auditor’s office make it difficult for the city to provide an effective collections process.”

That audit found that 14 Portland property owners owed the city more than $80,000 each in delinquent liens. Close to 300 of those liens were more than 10 years old. The audit’s conclusion?

“It appears that many property owners are willing to ignore timely payment, and instead wait for the sale of the property to satisfy the obligation. The threat of foreclosure for those owners, without action, renders this tool ineffective.”

Nothing has changed since those problems were brought to light in 2012, according to Grumm, who says Saltzman first became aware of the abandoned home problem when he oversaw BDS in 2011. Last year, Saltzman again was assigned to oversee BDS and was chagrined to find that the same zombie properties BDS had spotlighted five years ago were still abandoned and accumulating unpaid liens.

“Our city foreclosure (process) doesn’t work,” says Grumm, who lays much of the blame at the feet of the city auditor, and ordinances that have the auditor as the agency in charge of foreclosure. “They’re consistently giving deals to these vacant landlords.”

Hales says getting the homes either foreclosed upon or in receivership to somebody who will fix the structures is a high priority, and his newly proposed budget backs that up, with a request for a deputy city attorney position dedicated to solving the problem.

TRIBUNE PHOTO: ADAM WICKHAM - In the basement of another trashed abandoned home, Portland police officer Rob Brown finds bottles that squatters filled with urine, and a bucket where a fire had been lit.

Reining in city abuses?

But the City Auditor’s Office takes a different view. “We’re taking somebody’s property; it’s intended to be slow and deliberate,” Landis says. “Our code is not set up to be tough. Our code is set up to be fair and deliberate.”

In fact, current code was written after a 1965 scandal in which a 44-year-old single mother lost her home to the city after failing to pay a $28 sidewalk assessment. The city sold the home for $229.44. Later it awarded her $18,000 after she sued the city in federal court.

The auditor is in charge of collecting liens that other city agencies have placed on properties. That isn’t as easy as it sounds. Often the legal owner of a property is hidden behind a series of mortgage-holding transactions, or can’t be reached. And the definition of an abandoned home is not something that is clearly spelled out in any city code, Landis adds.

“It’s difficult to know if a home is actually abandoned or not,” she says. “If it’s empty, that’s one thing. But it still may not be abandoned.”

Foreclosure staff don’t do foreclosures

Foreclosing on abandoned homes has never been the focus of the office of foreclosure, according to Landis. Yes, that office is charged with collecting on unpaid liens owed to the city, she says, but it is also supposed to provide protection for homeowners. Often, there is a story behind a home where utility bills and zoning code fines have not been paid for years.

“You’re talking about vulnerable property owners, people who are elderly, who may be experiencing financial hardship,” Landis says. “There’s all manner of situations where the additional lien is the last of the person’s worries in terms of financial survival.”

Most of the homeowners dealt with by the auditor’s office eventually get set up with payment plans, or some other resolution is found to forestall foreclosure.

Stall tactics

But foreclosure manager Maciel admits that he often confronts repeat offenders — owners of homes with liens who have mastered the system, allowing them to sidestep fines and avoid foreclosure.

“They are adept at making small changes and fixes that buy them months of breathing room,” Maciel says. “They do the minimum needed to meet the inspectors’ requests.”

What Landis calls “a social services approach” takes up a great deal of the time of the foreclosure manager. For the most part, the properties the foreclosure manager is dealing with aren’t the worst of the worst abandoned home cases that the mayor’s office is trying to focus on, according to Stover. Which means there’s nobody at City Hall tasked with dealing with the worst zombie houses.

Landis says until last fall, her office wasn’t even aware that there was a problem with abandoned homes. “We are basically a servicing agency for the payment of liens,” she says. “We’re not out there driving around looking at properties, and we haven’t gotten any request or directive to be actively moving forward on foreclosure until recently.”

Even now, Landis says, nobody in her office has seen the list of 430 abandoned homes police reportedly keep watch over. As for the list with the supposed worst 32 cases?

“Almost every one of these has some side story that would make you pause and be careful about considering foreclosure,” she says.

Landis says if the mayor wants action on those homes, it’s going to take more than the one-person foreclosure manager to deal with them. It’s also going to take changes in city ordinances such as 5.30.20, which restrict the city’s ability to sell foreclosed properties. Landis says she intends to pursue those changes with the city attorney.

“If there were somebody who was coordinating what BDS is seeing, what the Office of Neighborhood Involvement crime prevention is seeing, the police bureau and the assessment portion, then I’d think we could get some leverage on this,” Landis says. “There is nobody specifically assigned to make sure all those pieces are working together.

“You need a blight czar,” she says.


Can the city learn from the county?

Portland hasn’t foreclosed on a home since 1965, but Multnomah County forecloses on about five homes a year.

The county is responsible for collecting property taxes, and when a homeowner gets three years behind in paying property taxes, an initial notice of potential foreclosure is sent out.

Tax foreclosure isn’t going to dig Portland out of its hole with abandoned properties, since the entire tax foreclosure process can take more than six years to complete. Even after a first notice is sent out, homeowners have three more years in which to pay their back taxes and redeem their properties.

But Multnomah County officials might be able to help Portland solve its abandoned homes problem. In fact, it’s tried, according to county spokesman Dave Austin.

Austin says the county has a standard agreement with a private title search firm that produces low-cost litigation reports on properties behind in tax payments. Those reports — which often require investigators to untangle complicated webs of bundled mortgages and sales — reveal who is legally responsible for each property.

Determining the legal status of abandoned homes is critical, say national housing experts. Cities that have fully vetted each problem property can look for patterns, such as one bank or individual holding title to a number of abandoned homes in a specific neighborhood.

Portland has only one employee charged with chasing down homes with outstanding liens. That employee, foreclosure manager Marco Maciel in the city auditor’s office, has more than 500 properties with more than 1,300 liens to deal with. He is responsible not only for investigating properties, but sending out notice after notice and following up with phone calls, in an attempt to get homeowners to avoid foreclosure and take responsibility for their properties. That can even include working with social service agencies to help property owners and their families resolve issues that led to home abandonment or non-payment of fines.

Each year, Maciel manages to collect about $1 million of the $6.3 million in liens owed the city by property owners. He doesn’t have the time to compile litigation reports specifically for hundreds of abandoned properties, says Sarah Landis, chief deputy in the auditor’s office.

Multnomah County approached Portland officials last year and offered help in getting those reports for the city’s abandoned properties, according to Austin, who says the county never heard back on the offer. The offer, he says, was made to the mayor’s office.

As for the properties the county has foreclosed on, most are put up for auction. And the returns from those sales — between $2.5 million and $3 million from the most recent auction — are earmarked for a fund to help low-income families with children find housing.

Turning Portland foreclosures into low-income housing makes perfect sense, says Chad Stover, policy adviser to Portland Mayor Charlie Hales.

“That would be the ultimate win,” Stover says.

Unfortunately, he says, that can’t happen the way city ordinances are written. Those ordinances don’t allow the city to sell foreclosed properties for more than the amount of the liens, a disincentive to sell a house that is worth several times that amount. They also specify that if more than one person or corporation wants to purchase foreclosed property, the winner will be determined by lottery.

That means the city couldn’t handpick a nonprofit low-income housing developer, as others have done.

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