San Bernardino and Riverside counties on Tuesday adopted resolutions urging federal lawmakers to give local governments a role in resolving the nation's liquidity meltdown.
The call for local participation comes after Monday's failure by Congress to pass a $700 billion rescue plan for Wall Street institutions holding the bad debts of homebuyers who entered unsound mortgages. Those mortgages spurred a runaway housing economy and led to its demise.
Securities acquired by the federal government in a rescue would be secured by mortgages on the properties now held by floundering financial institutions. Once the Treasury takes control of those assets, Inland county supervisors said they want the federal government to create contracts with regional public-private partnerships to oversee their disposition.
Regional partnerships would raise local capital to augment the federal investment while regional boards would manage the upkeep and sales of properties within their region, the supervisors said.
"Local business leaders and governments know more than outside interests about the issues and real estate economies in their own backyard," said Roy Wilson, chairman of the Riverside County Board of Supervisors. "Our participation is crucial in ensuring the secure investment of taxpayer dollars."
"The fate of our communities and neighborhoods should not be left to a bureaucracy or business interests thousands of miles away that have little if any knowledge about the local impacts of their decisions," said Paul Biane, Chairman of the San Bernardino County Board of Supervisors.
Riverside and San Bernardino counties -- which for years led the nation in population growth - have suffered some of the most significant negative economic consequences in the country from their unprecedented and almost unparalleled rates of foreclosures stemming from unsound mortgages, economist John Husing said.
"Establishing regional public-private partnerships to make sure these properties are systematically released into the market would restore their values while helping preserve and rehabilitate neighborhoods suffering economically and socially as a result of the foreclosure crisis," Husing said. "This benefit is further amplified by maintaining and increasing the number of owner-occupied homes."
As recently as last week, cities and counties in Inland Southern California learned they would be receiving $133.5 million of nearly $4 billion in federal funds to deal with blighted neighborhoods affected by the high number of foreclosures.
Riverside County, which has the fourth largest foreclosure rate in the nation, is slated to receive the third-largest allocation of almost $49 million.
Biane said if a federal plan goes forward, local interests must have a voice in the process. Biane said there would be greater public accountability from a regional public-private partnership.
Washington lawmakers need to recall the savings and loans crisis of the early 1990s and remember the negative impacts on communities that resulted from turning foreclosed properties over to distant business interests simply looking to turn a quick buck, Biane said.
"They dumped properties for far less than their market values. Solid neighborhoods and property values were further harmed. Communities and taxpayers were left holding the bag," Biane said.
Civic and elected leaders also see an opportunity to boost needed stocks of affordable housing, under the emerging plan. Some Inland county supervisors said they would like to see language built in to a partnership plan that would require a percentage of the mortgage assets be set aside for low and moderate income buyers.
"The fine details need to be worked out but we have an opportunity to lift ourselves out of a very dire situation and we need to take it and make sure we do the most with it," said Wilson, chairman of the Riverside County supervisors.
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