State legislation introduced Wednesday aims to reduce the number of empty homes in California and give tenants the right of first refusal to buy foreclosed properties. The bill was inspired by the plight of a group of homeless mothers who recently took up residence in a vacant West Oakland home to call attention to California’s housing crisis.
State Senator Nancy Skinner, D-Berkeley, introduced SB1079, which would allow cities and counties to fine corporations that let their properties sit vacant for more than 90 days. The legislation also allows local governments to seize the properties and use them for affordable housing.
If it’s approved, the bill might spark a legal challenge, and it’s unclear how big of an impact it would have in the Bay Area, where few vacant properties exist.
Skinner said the state’s housing crisis was worsened by corporations buying up properties and leaving them vacant — a problem that Moms 4 Housing brought to attention.
“Moms 4 Housing shined a light on the fact that while over 150,000 Californians are now homeless, right now in our own neighborhoods, there are more than 1 million vacant homes,” Skinner said. “Many of these affordable homes were snatched up during a foreclosure by corporations who then kept the houses vacant or flipped them for hefty profits.”
An estimated 1.1 million homes are vacant in California, according to 2017 U.S. Census Bureau data. But very few of those appear to be in the core Bay Area. In the San Francisco-Oakland-Hayward area, 0.38% of the housing stock was vacant in the fourth quarter of 2019, according to ATTOM Data Solutions, a company that compiles real estate data. That works out to about 4,539 vacant homes out of 1.2 million residential properties.
Attorneys who represent property owners say the legislation could face legal challenges. Though Skinner’s bill targets corporations, it could have unintended consequences on small landlords, said Daniel Ortner, an attorney at Pacific Legal Foundation, a Sacramento-based pro-property rights group.
“You have the right to not utilize your property,” Ortner said. “That is part of that traditional bundle of rights of property ownership. To say, if you’re not going to use it we are going to take it from you … that is unconstitutional. Property owners own their property, they should have the right to sell it to who they wish, not to be required to first offer it to others.”
In November, a rotating group of at least four mothers, who called themselves Moms 4 Housing, moved into the vacant home at 2928 Magnolia St. with their children. The families lived there for nearly two months before Alameda County Sheriff’s deputies evicted them, an act that Mayor Libby Schaaf condemned. The property owner, Wedgewood, has been one of Oakland’s most prolific house flippers, rehabbing and selling 160 homes over nine years.
Laura Foote, the executive director of pro-housing group YIMBY Action, said that despite the region’s low vacancy rate, Skinner’s legislation is a “worthwhile policy.”
“This is a very creative approach to trying to encourage genuinely vacant properties to be rented out,” Foote said. “We do have a really low vacancy rate so I don’t think anybody who is proposing this thinks this is going to solve every problem.”
In addition to having a low vacancy rate, the Bay Area doesn’t have a large share of home flips compared to other areas. In the third quarter of 2019, 380 homes were flipped, about 3.7% of all sales. California had 5,029 flips in the third quarter of 2019, about 5% of all sales, a 3% annual drop, according to ATTOM.
Home flippers who sold homes during this time period took an average of 177 days to complete the flips, ATTOM concluded.
Moms 4 Housing repeatedly called on Wedgewood to negotiate with the Oakland Community Land Trust so the mothers could purchase the property through the nonprofit, which acquires land and property for affordable housing. In January, Schaaf announced that Wedgewood agreed to negotiate the sale of the home with the land trust.
Less than two weeks later, Oakland Councilwoman Nikki Fortunato Bas introduced an ordinance that would give landlords an incentive to offer their tenants, affordable housing developers and land trusts right of first refusal when selling a property. Bas said her intention is to protect renters from losing their homes.
The City Council’s Community and Economic Development Committee is expected to take up the issue March 24.
Carroll Fife, regional director of Alliance of Californians for Community Empowerment, an organization working with Moms 4 Housing, expressed some hesitation about SB1079, but mostly applauded it.
“We need real housing solutions and the more the better,” Fife said. “The details matter.”
Skinner’s legislation would give tenants 90 days and the “exclusive first opportunity” to buy a home they’re living in if it goes into foreclosure for a reasonable price. That price would be based on the lowest assessment of the property by a local agency.
If the tenants do not purchase the property, community land trusts, nonprofit affordable housing organizations and cities and counties would have a chance to purchase the property. The legislation is similar to a new law in San Francisco that gives nonprofits first dibs on purchasing multifamily residential buildings.
The proposed state legislation allows cities to penalize corporations that leave properties empty for more than 90 days or require the corporation to sell the property to the city. Some details about the bill are still being worked out. For example, it’s not clear what would happen if the home is empty due to renovations.
Money collected from the penalties would be used for homeless diversion, rental assistance and affordable housing purposes.
“There is no excuse for a vacant home when so many of our neighbors are homeless,” Skinner said. “And helping tenants buy foreclosed homes rather than be evicted will keep people housed.”
Sarah Ravani is a San Francisco Chronicle staff writer. Email: sravani@sfchronicle.com Twitter: @SarRavani
