Updated from 9:39 a.m. EST with Wells Fargo statement.
NEW YORK (TheStreet) -- Los Angeles City Attorney Mike Feuer is suing Citigroup (C) and Wells Fargo (WFC), alleging that the banks engaged in discriminatory mortgage lending practices that triggered a wave of foreclosures, hurting the city's tax revenue.
In complaints filed in U.S. federal court, the city alleged that Citi and Wells "... engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis."
The city is seeking damages for lost tax revenue, the decrease in the value of homes in neighborhoods affected by foreclosures and the increased costs for city services due to foreclosures.
The complaint cited a report by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition which estimated that the mortgage crisis caused 200,000 foreclosures in Los Angeles and an estimated $78 billion decline in home values during 2008-2012.
The city is estimated to have lost about $481 million in property tax revenue over the period. The foreclosure crisis has also increased costs to local governments in terms of safety inspections, trash removal and maintenance. The report estimated the cost of the foreclosure crisis in Los Angeles at $1.2 billion.
Los Angelese alleged that the banks engaged in "red lining," the practice of denying credit to particular neighborhoods based on race, and "reverse red lining," the practice of targeting minority communities with predatory loans.