Beacon Hill to the rescue on Gateway Cities’ foreclosure problems? (WMassP&I)

Five years ago, cheers broke out in the Springfield City Council chamber after councilors unanimously approved the city’s foreclosure ordinance. Ravaged by the foreclosure crisis and subsequent recession, Springfield had taken a notably bold step toward curbing the deterioration of neighborhoods littered with vacant, bank-owned homes.

The ebullience did not last. Lawsuits were almost immediate. Advocates had to beat back settlements that would have gutted the ordinance. Federal courts rejected challenges under the US constitution and the city finally inched toward implementation. The denouement came three years later when the Massachusetts Supreme Judicial Court ruled against Springfield and imperiled other communities’ foreclosure ordinances. Recent legislation offers cities like Lynn, Springfield and Worcester some hope.

On June 30, the Massachusetts Senate breathed new life into local efforts to minimize the impact foreclosed properties have on  municipalities with a brief four-line bill. If it becomes law, the bill would reverse recen tcourt and allow communities to require owners of vacant, foreclosed homes to post sureties used to finance those properties’ upkeep.

Sen. Harriette Chandler (via Twitter/@Sen_Chandler)

The goal, Worcester Senator Harriette Chandler said, is to ensure, “our communities and municipalities are not stuck with a lot of vacant properties that are foreclosed upon.”

Like many post-industrial Bay State cities, Worcester saw a sharp rise in home foreclosures. Vacant and uncared for, the properties dragged down the health and stability of the surrounding neighborhoods. By some counts, 72,000 foreclosures rocked cities and towns in the commonwealth.

The Senate bill, which was passed unanimously, heartened activists and veterans of Springfield’s battle from five years ago, though it would not revive the mediation provision of the city’s ordinance.

“I’m very happy that they allowed for the surety bonds to be passed,” Rose Smith, a lead community organizer for Springfield No One Leaves, a housing advocacy group, said. But, she added, she was “disappointed that they took the mandatory mediation out of it.”

The suit against Springfield, initiated by local banks and supported by the Massachusetts Bankers Association, originated in federal court. In 2013 after winning in federal district court, the city began to apply the ordinance, ending the détente it had with the banks during litigation. A federal appeals court stayed implementation, but the case ultimately turned on state law, prompting the SJC’s December 2014 ruling that struck the city’s ordinance.

The John Adams Courthouse in Boston, seat of the SJC. (WMassP&I)

The SJC actually rejected several of the banks arguments, including that the ordinance’s fees were a tax—an exclusive power of the legislature. However, it agreed that requiring bonds to maintain properties and mandatory mediation between banks and homeowners in arrears were implicitly preempted by state financial and health laws.

Lynn and Worcester adopted their own foreclosure rules, mirroring Springfield’s. However, the SJC’s ruling also undermined those cities efforts. Some communities, like Woo-town, were undeterred and have considered ways to shoehorn a revised ordinance into the SJC’s decision.

Chandler said the intent of the legislation filed by herself and Longmeadow Senator Eric Lesser, whose district includes about a third of Springfield, was to make clear state law did not stand in the way of localities trying to keep their neighborhoods well-maintained.

“Our cities were hit hard by the housing crisis. This bill will prevent blight, protect property values, and hold banks accountable for the properties they take into foreclosure,” Lesser said in a statement following the bill’s passage.

Smith said the removal of the mediation section was expected, but that it was likely to reappear as an amendment to other legislation either as state or local program.

The original ordinance may not resurrect Springfield’s ordinance, however.

Springfield City Solicitor Ed Pikula (via Twitter/@attyemp)

“While it is uncertain what the final legislation may contain, it is unlikely, as a legal matter to ‘revive’ the Ordinance that the SJC ruled was pre-empted by state law,” Springfield City Solicitor Edward Pikula said in an email.

The bill’s silence on mediation and its cap on the surety municipalities could require owners of foreclosed properties to post confirms Pikula’s assessment.

Amaad Rivera, a former Springfield City Councilor who led the fight to pass the city’s ordinance in 2011, was unconcerned that the city might need rewrite its ordinance under the proposed legislation.

“If that’s the case, that’s fine,” he said in an interview. “What [the Senate’s] law is saying is we can do this. It is literally modeled on our legislation.”

Smith, observing that foreclosure in Springfield had gone up dramatically even as the crisis nationwide had settled, said any new ordinance would need to include the surety bond to maintained vacant properties.

At City Hall in the Heart of the Commonwealth, waiting on Beacon Hill (via wikipedia)

The bill’s fate remains uncertain, however. Aside from the ticking legislative clock—the legislature’s session ended July 31—the position of groups like the Massachusetts Bankers Association could play a role. A spokesperson for the MBA did not return a request for comment made last week.

Senator Chandler said compromises were made following disagreements among her colleagues during the bill-writing process, “We worked to fix them so that we were able to get a unanimous vote.”

Likewise in the City of (foreclosed?) Homes (WMassP&I)

The MBA’s opposition alone, if it materializes, probably would not block the bill, but it is competing for attention with hundreds of other bills. It has the support of Gateway City delegations from across the state, which took the foreclosure crisis in the throat.

“I think they will vote on it. Our Springfield delegation has been pushing really hard,” Smith, the SNOL organizer said. Senator Chandler echoed that sentiment, expressing her hope that her House colleagues will push for a vote before the session ends.

“I am working with my colleagues on taking the next step to ensure that cities like Springfield and Worcester are able to enact their own ordinances to require that these homes are maintained until they are purchased,” Springfield State Rep Jose Tosado said in a statement. As Council President, Tosado presided over the Council’s approval of the foreclosure ordinance in 2011.

Governor Charlie Baker’s office did not indicate a stance on the foreclosure legislation should it get to his desk. “The administration will carefully review any legislation reaching the governor’s desk,” gubernatorial press secretary William Pittman told WMassP&I in an email.

Given the unanimous Senate vote and the compromise language compared to Chandler’s original legislation, there is some belief that Baker either would support the bill or otherwise not start a war over it and unsettle the relative peace on Beacon Hill.

“It would be interesting if this is the fight the governor chooses,” Rivera remarked.

The need certainly remains real for activists and government officials, perhaps increasing pressure on the House and the governor to approve the bill.

“The City of Springfield is still struggling with the impacts of the foreclosure crisis, with many distressed properties,” Solicitor Pikula said. “Negative consequences include not only displaced families who have lost their homes, but has also caused suffering for the entire community,” he added, noting the impact on the condition of neighborhoods, crime and tax rolls.

Chandler said that Worcester faced many of the same things, but underscored that the prevalence of the problems brought on by vacant, foreclosed home adds to the urgency for lawmakers to act.

“This could be any community,” she said.