Fun Fact: The Cuyahoga Land Bank Is Social!

The Cuyahoga Land Bank has been very social lately! Last week we surpassed 1,000 followers on Twitter and 1,500 ‘likes’ on Facebook! Connect with us and ‘Like’ Cuyahoga Land Bank on Facebook and ‘follow’ @CuyaLandBank on Twitter today to see all of the happenings at the #CuyahogaLandBank!

Posted in 2014.4.1, Fun Fact!, Newsletter

Congressman Gets Land Bank Briefing

It is not every day that a Congressman comes to the Cuyahoga Land Bank offices for a county land bank briefing.  That is just what happened in January 2014 when Congressman David Joyce visiteDavid_Joyced the Cuyahoga Land Bank’s offices.
“We work very closely with our U.S. Representatives and U.S. Senators on matters that are important to land banking and community development.  We also appreciate the bi-partisan way in which our congressional delegation works together for the benefit of the community,” said Gus Frangos, President of the Cuyahoga Land Bank.
That bi-partisanship was on display last year when Representatives Marcia Fudge, Marcy Kaptur and David Joyce introduced the Restore Our Neighborhoods Act in an attempt to assist cities, counties and community development groups in securing funding for needed blight clearing activities in some of the hardest hit areas throughout the midwest. “I think the work of county land banks is crucial to the recovery of our neighborhoods in the aftermath of the foreclosure crisis.  My district includes several counties that have county land banks, and I thought it would be good to get a briefing from what is considered the best land bank in the nation,” said Congressman Joyce.
The visit was a follow-up from a meeting that Frangos and Cuyahoga Land Bank staff attorney, Doug Sawyer, had in Washington D.C. with the respective Representatives’ staff to address appropriate balances between asbestos regulation and the need to demolish blighted properties.  “I am happy to work with the Cuyahoga Land Bank and cities throughout the midwest to assist in achieving a path forward that produces the best results in a safe manner,” said Congressman Joyce.
Congressman Joyce was very familiar with the tax foreclosure process as he served as a county prosecutor for many years.  “Congressman Joyce is aware of the value of strategic tax foreclosures and the need to repurpose non-productive properties through that process,” said Nick Ciofani, District Director for Congressman Joyce.

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Posted in 2014.4.1, Newsletter

New program to help single mothers get affordable homes (WEWS)

CLEVELAND – The City Mission, area churches and the Cuyahoga County Land Bank are teaming up to help single mothers eventually become homeowners.

It’s called The New Horizons Permanent Housing Program. “The church owns the home, The City Mission is the provider of the family and provide support service and the land bank has the inventory of homes,” said Rich Trickel,City Mission CEO.

The program is aimed at specifically helping single mothers who havecompleted the City Mission’s program at Laura’s Home. Laura’s Home is a crisis center for women and children. It is full and has been for years.

Currently there are six women who have completed the program at Laura’s Home and who have found employment.

On average, they are earning between $8.50 -$11.00 per hour. “A basic two bedroom apartment in Cleveland, need to earn $13.50 per hour,” added Trickel. “There is an unbelievable need.”

Westlake’s Church On The Rise is the first church to purchase a house from the Cuyahoga County Land Bank. The church bought a five bedroom house for $5,000. Dozens of volunteers are ready to turn the house into a home. “We’re thrilled to be the first church to take part in the homes for the homeless,” said Pastor Paul Endrei with Church On The Rise.

The collaboration between the organizations, “It’s a homerun,” said Gus Frangos with the Cuyahoga County Land Bank.

Endrei said renovations could begin on the church before the end of the month. There will also be programs to help with life skills for the women who could become homeowners.

Watch from the source.

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Posted in Uncategorized

Did You Know?: Safety Forces Partner with Cuyahoga Land Bank for Training Exercises

The Cuyahoga Land Bank partners with police and fire departments across Cuyahoga County for training exercises. Last week, fire cadets from the Cuyahoga Community College Fire Training Academy participated in a three day live fire training course at a Cuyahoga Land Bank owned property that was slated for demolition.  You can view pictures of last weeks Fire Training Academy exercise on cleveland.com.
If you are interested in learning more about how your city’s safety forces could partner with the Cuyahoga Land Bank for training exercises, please contact, Cheryl Stephens Director of Acquisition, Disposition and Development via email or call 216-698-8853.

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Posted in 2014.4.1, Didja Know?, Newsletter

Cuyahoga Land Bank: Past, Present, Future

2013 Annual Report

Ask any staff member of the Cuyahoga Land Bank, and they will tell you that time flies at the Cuyahoga Land Bank.  They call it “Land Bank Time.”  That means an hour seems like a day, a day seems like a week and so forth.Dennis_Keating
Dennis Keating, Professor and Director, MUPDD Program, Department of Urban Studies, Maxine Goodman Levin College of Urban Affairs, Cleveland State University, headlined and co-authored the Cuyahoga Land Bank’s two year report ending December, 2013.
“Two years has gone by fast.  It is remarkable to see in one report all of the things the Cuyahoga Land Bank has accomplished, its programs and all of its partners and collaborations since our last report,” said Gus Frangos, President and General Counsel of the Cuyahoga Land Bank.  Indeed, because of the fast-paced and dynamic transactional nature of the Cuyahoga Land Bank, it is easy to go from one project to the next without realizing just how significant the accomplishments are over the last two years, according to Chief Operating Officer, William Whitney.
In addition to the accomplishments and report on the status of the Cuyahoga Land Bank, the report is filled with numerous testimonials from the Cuyahoga Land Bank’s partners, including mayors, legislators, and community development organizations, veterans, CDCs and faith-based organizations.  Frangos emphasized that the progress and numerous accomplishments of the Cuyahoga Land Bank was due in large part to excellent staff, professional board leadership and goodwill and cooperation amongst the various stakeholders and governmental agencies with which it works.
Dr. Keating prepared the first analytical report on the Cuyahoga Land Bank back in 2011.  According to Dr. Keating, “The organization has made tremendous substantive and strategic strides in battling the blight caused by the foreclosure crisis.”  Although the Cuyahoga Land Bank has extended its reach to the re-development of properties involving important social and human services, the Land Bank continues to remain laser-focused on its core mission which is the renovation of homes and demolition of blighted structures.  In this regard, as of year-end 2013, the Land Bank demolished 2213 abandoned blighted homes and has facilitated the renovation of 819 homes through its various programs, including its most popular Deed-in-Escrow program.
Hats off to the Cuyahoga Land Bank!
You can view the 2013 Cuyahoga Land Bank Annual Report by clicking on the picture at the top of this story or by visiting our website’s Publications/Reports page.

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Posted in 2014.4.1, Newsletter

Cuyahoga Land Bank: Past, Present, Future | Congressman Gets Land Bank Briefing – Cuyahoga Land Bank News – 2014.4.1

Posted in 2014.4.1, Newsletter

FitzGerald must deliver on proposed $50 million for blight fight to help ease tax burden on ‘burbs: editorial (Plain Dealer)

The subprime loan scandal that brought on the Great Recession more than six years ago left in its wake distressed and stripped zombie properties. Many have become crime magnets, triggering a phenomenon known as “blight flight.” That urban exodus has left deep financial scars in Greater Cleveland.

The price of this population loss makes it even more urgent that Cuyahoga County Executive Ed FitzGerald deliver on his State of the County promise of a $50 million bond issue to get a jump-start on demolition and repairs.

A new study by the local nonprofit Thriving Communities Institute shows thatabandoned and foreclosed properties in Cleveland and the inner-ring suburbs of East Cleveland, Maple Heights, Garfield Heights, Euclid and Newburgh Heights have cost taxpayers in other Cuyahoga County communities more than $44 million because of shifting tax burdens.

The research was financed by Cleveland City Council, the Cuyahoga Land Bank and Cleveland Neighborhood Progress.

Fortunately, FitzGerald says he’s been working on the issue and will have something to County Council soon.

“We will be able to introduce a bill to council by the end of April,” FitzGerald said in an interview for this editorial.

Good. County Council President C. Ellen Connally said she and council need to hear key details such as when the $50 million in bonds to “protect and restore our neighborhoods” will be issued and how they will be financed.

“It’s a great idea,” Connally said about the FitzGerald proposal. “But the devil’s in the details and we have no details.”

The more than $44 million in shifting tax burdens cited in the Thriving Communities study come as property values in harder-hit communities plummet.

For instance, the percentage paid by taxpayers in 53 of Cuyahoga County’s 59 communities for county levies that float the general fund, bonds and social programs as well as the Metroparks, Cuyahoga Community College and the Cleveland-Cuyahoga Port Authority rose from 79.2 percent in 2006 to 83.5 percent in 2012, according to the study.

An earlier study, also spearheaded by Thriving Communities, demonstrated that targeted demolition stabilized real estate values, decreased foreclosures and lessened tax delinquencies.

The figures show why county action is needed: We are all in this together. There is no sanctuary in Cuyahoga County whether you live in Mount Pleasant or Pepper Pike.

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Posted in Land Bank Coverage

Fire cadets train at abandoned house

Fire cadets trained at an abandoned house Monday as part of their studies at the Cuyahoga Community College Fire Training Academy. The 29 cadets are going through a series of live fire training sessions at the house, which is owned by the Cuyahoga Land Bank, and is slated for demolition. There will be three days of live fire training, and then the cadets will then be ready to apply for certification. They took a 10-week class for 260 hours of course work. Started in 1971, the Fire Training Academy is located at Tri-C’s Western Campus in Parma. The controlled fires are started with Class A combustibles, in this case, wood pallets and straw. See a Lisa DeJong photo gallery from the training session.

Check out the photos!

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Posted in Land Bank Coverage

Vacant and Abandoned Properties: Turning Liabilities into Assets (HUD)

Vacant and Abandoned Properties: Turning Liabilities Into Assets

    • The absence of universal definitions of vacancy and abandonment complicates efforts to assess the number of vacant and abandoned properties nationally.
    • Vacant and abandoned properties are linked to increased rates of crime (particularly arson) and declining property values. The maintenance or demolition of vacant properties is a huge expense for many cities.
    • It is critical to match strategies for combating vacancy to neighborhood market conditions.

Vacant lots can be greened and repurposed for new uses, such as this play area in Pittsburgh’s East Liberty neighborhood.

Photo courtesy: Sara InnamoratoDerelict houses, dormant factories, moribund strip malls, and other types of vacant and abandoned properties are among the most visible outward signs of a community’s reversing fortunes. Properties that have turned from productive use to disuse are found in cities, suburbs, and rural areas throughout the country, and they vary widely in size, shape, and former use. But these vacant and abandoned properties are more than just a symptom of larger economic forces at work in the community; their association with crime, increased risk to health and welfare, plunging property values, and escalating municipal costs make them problems in and of themselves, contributing to overall community decline and disinvestment.1 Local government officials, community organizations, and residents, however, increasingly view vacant properties as opportunities for productive reuse, reimagining blight and dilapidation as urban farms, community gardens, and health facilities. To them, empty homes can become assets in neighborhood stabilization and revitalization that can be renovated and reoccupied.

Vacant and abandoned properties have long plagued the industrial cities of America’s Rust Belt, but the spike in foreclosures following the recent recession has compounded problems for these areas and has caused vacancy rates to surge nationwide, especially in recently booming Sun Belt states such as Florida, Arizona, and Nevada. These communities face mounting blight and physical deterioration of properties, declining tax revenues, and rising public costs. Although nationwide factors (in particular, the foreclosure crisis) helped create these vacancies, local factors — the condition of the properties, the health of the local housing market, and the strength of the regional economy — are what shape the range of options available for returning these properties to productive use. The approach taken to reclaim one vacant property among many in a distressed Detroit neighborhood, for example, will be different from that taken to reclaim a property in a rebounding Phoenix suburb — or, for that matter, in another Detroit neighborhood with a healthy housing market.

Local political and economic contexts, as well as limitations of capacity and resources, shape the tools that local governments, nonprofits, and neighbors employ to address and reuse vacant and abandoned properties. The most desired outcome is to quickly return a property to its previous use — an owner-occupied residence or a thriving business. However, tight credit, weak markets, population loss, or other factors may require other solutions such as demolition, conversion of owner- occupied housing to rental housing, or replacement (such as constructing a solar farm on a former industrial site). Strategies for reuse aim to stabilize and revitalize neighborhoods and may stimulate economic recovery and growth or, in the case of shrinking cities, manage decline in ways that improve quality of life for the remaining residents.

Defining the Problem

A chart listing the highest housing vacancy rates among the 75 largest metropolitan statistical areas in 2012.
Source: United States Census Bureau. 2012. American Community Survey 1-Year Estimates. Note: Vacant units do not include seasonal, recreational, or occasional uses.Properties may become vacant for a variety of reasons, some of which are relatively benign. A property that is for rent or sale can be vacant for a short time, and a vacation home might be vacant for most of the year. If these properties are well maintained by responsible owners, they will not become eyesores or depress neighboring property values. In general, a vacant property becomes a problem when the property owner abandons the basic responsibilities of ownership, such as routine maintenance or mortgage and property tax payments.2 Multiple variables can lead authorities to designate a property as either vacant or abandoned, including the physical condition of a structure, the amount of time that a property has been in that particular condition, and the relationship of the owner to the property. For example, in Baltimore, the city building code defines residences as vacant only if they are uninhabitable, not if they are merely unoccupied.3

The absence of universal definitions of vacancy and abandonment complicates efforts to assess the number of vacant and abandoned properties nationally. The best aggregate sources include the U.S. Census Bureau and the U.S. Postal Service, although these are not without limitations. Using these sources, the U.S. Government Accountability Office (GAO) reported in 2011 that vacant residential units, not including those used seasonally or by migrant workers, increased from 7 million in 2000 to 10 million in 2010.4 The Joint Center for Housing Studies of Harvard University reported that a subset of this category, homes vacant and not being marketed for sale or rent, reached a record high of 7.4 million in 2012, with increases concentrated in the high-foreclosure areas of the South and West.5 Although vacant homes can be found throughout the country, they tend to be concentrated; nearly 40 percent of the nation’s vacant homes are located in just 10 percent of all census tracts.6 More than half of the census tracts with vacancy rates of 20 percent or higher were in just 50 counties, most of them in metropolitan areas. Wayne County in Michigan and Cook County in Illinois, for example, each have more than 200 high-vacancy neighborhoods.7 In addition to the many vacant and abandoned residential properties across the nation, estimates place the number of brownfields — idle former industrial properties with real or perceived environmental contamination — at approximately a half-million.8

The current inventory of vacant properties results from two main causes: the foreclosure crisis as well as long-term urban decline, depopulation, and disinvestment. Many Rust Belt cities have seen substantial population loss since their twentieth-century peaks as residents left for suburbs or other regions. This decline in the number of households has created a tremendous gap between housing supply and demand. Not only does this mismatch leave many structures vacant, but it severely weakens local housing markets, limiting the potential of market-based solutions to vacancy.9 Jobs and retail likewise suburbanized in the latter half of the twentieth century, leaving behind former sites of industrial production and commercial activity. The shrinking population — and the typically lower incomes of those who remain — are often insufficient to support commercial revitalization.10 Former industrial centers such as Baltimore, Cleveland, Detroit, and Gary, Indiana are dotted with empty factories and have thousands of foreclosures and vacant residential properties. Sun Belt metropolitan areas that were booming just a decade ago now suffer from widespread foreclosures.11 Both residential and commercial foreclosures are at high risk of becoming vacant or abandoned.12 Former occupants are likely to vacate the property, and because the costs associated with the foreclosure process are high and the value of a given property is often very low, lenders or servicers may walk away.13 In Nevada, Arizona, Florida, and Georgia, all states with high foreclosure rates, nonseasonal vacancies increased by more than 85 percent between 2000 and 2010.14

Measuring the Impacts

Vacant and abandoned properties have negative spillover effects that impact neighboring properties and, when concentrated, entire communities and even cities. Research links foreclosed, vacant, and abandoned properties with reduced property values, increased crime, increased risk to public health and welfare, and increased costs for municipal governments.

Studies attempting to quantify the effect of foreclosures on surrounding property values find that foreclosures depressed the sales prices of nearby homes by as little as 0.9 percent to as much as 8.7 percent.15 Foreclosed homes may or may not become vacant or abandoned, at which point a distressed property may have a more pronounced effect on surrounding properties. In a study of Columbus, Ohio, Mikelbank finds that vacant properties have a more severe impact on their immediate surroundings than do foreclosures, which have a relatively modest impact but over a larger area.16 Whitaker and Fitzpatrick also separate vacant properties from foreclosures in assessing spillover effects, finding that in the Cleveland area, being within 500 feet of a vacant property depresses the sale price of a nondistressed home by 1.7 percent in low-poverty areas and 2.1 percent in medium-poverty areas.17 Research also suggests that the longer a property remains vacant, the greater its impact on surrounding property values and the larger the radius of this effect.18 A study of Baltimore finds that this impact is confined to within 250 feet of properties that have been abandoned for less than 3 years; after 3 years, however, the impact can extend as far as 1,500 feet (although at a smaller magnitude).19

The “I Wish This Were A…” project in Lansing, Michigan invites community members such as the woman pictured above to reimagine use of this abandoned store.
Photo courtesy: City of Lansing Development OfficeVacant and abandoned properties are widely considered to attract crime because of the “broken windows theory” — that one sign of abandonment or disorder (a broken window) will encourage further disorder.20Increased vacancies leave fewer neighbors to monitor and combat criminal activity. Boarded doors, unkempt lawns, and broken windows can signal an unsupervised safe haven for criminal activity or a target for theft of, for example, copper and appliances.21 Cui’s study of Pittsburgh shows that foreclosure has no effect on crime; however, after a property becomes vacant, the rate of violent crime within 250 feet of the property is 15 percent higher than the rate in the area between 250 and 353 feet from the property. In addition, longer periods of vacancy have a greater effect on crime rates.22 In a study of Philadelphia, Branas, Rubin, and Guo report an association between vacant properties and risk of assault, finding vacancy to be the strongest predictor among almost a dozen indicators after controlling for other demographic and socioeconomic variables.23

Arson is a particular problem for vacant and abandoned properties. The U.S. Fire Administration estimates that there were 28,000 fires annually in vacant residences between 2006 and 2008, with half of these spreading to the rest of the building and 11 percent spreading to a nearby building. The organization also estimates that 37 percent of these fires were intentionally set and that 45 deaths, 225 injuries, and $900 million in property damage result from these fires each year.24 Because vacancies are so closely associated with arson, vandalism, and other crimes, local ordinances routinely label vacant or abandoned properties as a threat to the health and welfare of the community.25

Local governments bear the cost of maintaining, administering, and demolishing vacant and abandoned properties as well as servicing them with police and fire protection and public infrastructure. One study calculated that the city of Philadelphia spends more than $20 million annually to maintain some 40,000 vacant properties, which cost a conservatively estimated $5 million per year in lost tax revenue to the city and school district.26 In their 2005 Chicago study, Apgar, Duda, and Nawrocki estimate direct municipal costs ranging from $430 for a foreclosed and vacated property sold at auction to $34,199 for a vacant property destroyed by fire, based on varying durations of vacancy, remediation efforts, and other circumstances such as crime.27 Doors and windows must be secured and often covered with plywood, lawns cut, and trash removed. Maintenance costs vary according to the property’s location and condition. For example, Chicago officials estimated costs of $875,000 to board up or secure 627 properties in 2010, whereas Detroit officials estimated costs of $1.4 million to do the same for 6,000 properties over a period of nearly a year and a half. Lawn mowing costs can add up quickly, as in the case of the $25 spent on each of Detroit’s 45,000 city-owned lots and properties.28 A 2009 study from Baltimore concluded that each vacant property on a block increased annual police and fire expenditures by $1,472.29. According to a study of vacant and abandoned properties in Oklahoma City, commercial properties disproportionately affect these public safety costs. Although commercial properties make up only 3 percent of Oklahoma City’s vacancies, they account for approximately 40 percent of all police and fire calls.30

Demolition costs can vary widely based on several factors, including whether the home is attached to occupied residences, such as a Baltimore row house that can cost $40,000 to demolish, or whether it contains asbestos or lead-based paint. GAO states that demolition typically costs between $4,800 and $7,000 per property.31Municipalities also incur administrative costs as they search for owners, enforce codes, and oversee foreclosures, although they may recover some of these costs through fines or fees if an owner can be identified and compelled to pay. Vacancies also reduce local government revenues directly, because owners may walk away from their tax obligations, and indirectly, because of their impact on nearby property values and tax assessments. Although in some instances cities can recover this lost revenue through tax lien sales, in others property ownership reverts to the city, which has no viable option other than demolition.32

Responding to Vacant and Abandoned Properties

A combination line and bar graph showing the number of housing units and year-round vacancy rates in the U.S. from 1965 to 2010.
Sources: 1965 to 1999 data from “Table 7. Annual Estimates of the Housing Inventory: 1965 to Present,” and 2000 to 2010 data from “Table 7a. Annual Estimates of the Housing Inventory.” U.S. Census Bureau. 2012. “Housing Vacancies and Homeownership: Historical Tables,” Current Population Survey/Housing Vacancy Survey. See sources for additional explanatory notes. www.census.gov/housing/hvs/data/histtabs.html. Accessed 6 February 2014.Because of the mounting costs and difficulties that vacant and abandoned properties place on communities, government, nonprofit, and community stakeholders are taking measures to stem and even reverse the tide of foreclosure, vacancy, and abandonment. In some cases, the scale of the problem — and the data infrastructure, code enforcement staff, expertise, and funding required to tackle it — overwhelms the capacity of local governments to manage it.33 A significant challenge for most jurisdictions is to identify the number, location, and ownership of vacant properties.34 Information regarding possible vacancies is often spread among several agencies, and records of ownership or responsibility for a property can be murky, dispersed among occupants, investors, servicers, and lenders. Despite these difficulties, communities need recent and reliable data to understand the problems they face, inform decisionmaking and policy, and tailor responses to the varying conditions and characteristics of the cities, neighborhoods, and properties in question.35 To help local officials track problem properties, many jurisdictions have enacted vacant property registration ordinances that require owners to register their property and, typically, pay a fee.36Fees that escalate the longer a property remains vacant can create a disincentive for owners to mothball properties, encouraging them to return these properties to productive use; in addition, revenue from these fees offsets the costs associated with vacant properties.37

The Reinvestment Fund and the National Neighborhood Indicators Partnership have been critical resources for localities developing data tools and systems to track and address their vacant properties. In the city of Syracuse, New York, an IBM Smarter Cities team developed a forecasting model to help identify neighborhoods and properties at risk of vacancy-related problems and those in which an intervention would have the greatest impact. As the researchers put it, “The city’s goal is to move from decision-making based on ‘educated anecdotes’ and reactive strategies aimed at the most urgent need, to policy development based on informed, holistic insight, and proactive interventions that prevent and reverse decline,”38 (see “Targeting Strategies for Neighborhood Development”).

As local officials learn of potential vacant and abandoned properties through registration, neighbor complaints, visual surveys, property tax delinquency, or other means, they typically turn first to code enforcement and tax liens to make owners take responsibility for the property and return it to productive use. Vacant and abandoned properties can quickly fall into enough disrepair that they no longer comply with local building codes. Code enforcement officials, who are empowered to secure properties that pose a threat to public health, safety, and welfare, can then issue citations and levy fines on problem properties.39 Successful early intervention is the best course of action because deterioration compounds quickly over time. One of the greatest obstacles to timely and effective code enforcement, according to Joseph Schilling, director of the Metropolitan Institute at Virginia Tech, is tracking down and holding responsible the owners and servicers of loans in default.40 Real estate owned (REO) properties pose special challenges. Mortgage servicers, which are usually national or international companies, must contend with the local laws and codes that apply to a given property. When officials can identify the property owners and hold them responsible, they can ensure that code violations are rectified and mitigate the negative impact of the property. If the owners are not responsive, local governments can take control of the property and pursue the appropriate course: either rehabilitation or demolition and reuse.

Although neglected upkeep may be the most visible sign of vacancy (and one that is likely to result in a code violation), “property tax delinquency,” Alexander and Powell find, “is the most significant common denominator among vacant and abandoned properties.”41 When an owner stops paying property taxes, local governments initiate a tax-foreclosure process by placing a tax lien on the property. The lien is intended both to recover taxes owed and to prompt the owner to take responsibility for the property. Owners typically have the opportunity to pay off the lien, but the property reverts to the municipality if the owner has walked away from it. Both lost property tax revenues and reverted properties can pose problems for local governments, although the latter can also present an opportunity to exert some control over reuse of the property if the municipality is prepared to do so, such as through a land bank.

When a local government takes ownership of a property, it typically will attempt to transfer responsibility to a new owner as quickly as possible through the sale of either tax liens or the properties themselves. These processes, which can vary in form, must balance the rights of property owners with the public’s interest in promptly moving properties into responsible ownership and productive use. Tax liens and tax-foreclosed properties can be auctioned, sold in bulk, or, where legal, transferred to land banks, community development corporations (CDCs), or other nonprofits. In a study of tax-foreclosure practices in Flint and Detroit, Dewar finds that expedited property auctions, which require full payment on the day of the auction and do not give bidders an opportunity to assess the quality of the property beforehand, favor investors and speculators. These sales provide municipalities with immediate revenue, but they ultimately result in continuing disinvestment and recurring foreclosures.42 Similarly, laws that require municipalities to sell tax-foreclosed properties to the highest bidder favor speculators over other types of bidders.43Speculative investment in vacant and abandoned properties is not necessarily bad for neighborhood stability; these investors may well be responsible property owners. Dewar argues, however, that more deliberative processes could result in more property being taken over by owner occupants, neighbors, land banks, and nonprofits.44 Among the tools available to local governments to discourage irresponsible investors are strict code enforcement; rental registration and licensing; a rental conversion fee imposed when an owner-occupied property becomes a rental; and a requirement that all liens, taxes, and code violations be resolved before any transfer of property.45

Matching Strategies to Market Conditions

Code enforcement and tax foreclosure can result in owners taking responsibility for or selling properties, public ownership of vacant properties, or public sale of properties to new owners. Local market conditions will govern the possible reuses of these properties. Governments and nonprofits are using data tools to create neighborhood typologies based primarily on market conditions to guide reuse strategies. In stronger markets, policymakers and community organizations attempt to prevent vacancies in the first place or keep them from spreading, get responsible owners and occupants into vacant properties as quickly as possible, and try to stabilize property values and reverse decline. An emerging trend among these stakeholders is to target resources in stronger neighborhoods that are at risk but are not yet distressed.46 In other cases, resources have been concentrated in low-income target areas to reach the critical mass needed to sustain private investment.47 In such distressed neighborhoods, markets may be too weak to facilitate the reoccupancy of vacant properties. In shrinking cities, large-scale demolition and repurposing are needed to reduce the supply of housing to match demand as well as to deal with properties that cannot be rehabilitated cost effectively for market sale or rental. (For more detail on the methodologies and applications of such efforts, see “Targeting Strategies for Neighborhood Development.”)

Strategies for Stronger Markets. Stronger markets offer the possibility of keeping owner occupants in homes at risk of becoming vacant or quickly reoccupying homes that have already become vacant. Foreclosure prevention programs, rehabilitation for sale, or scattered-site rental housing are among the stronger market strategies that promise to reduce the inventory of vacant homes. Neighborhood marketing and commercial revitalization strategies can help these neighborhoods retain and attract residents by stimulating the demand necessary to reoccupy vacant homes. Some severely dilapidated vacant properties in these neighborhoods might still require demolition, but these typically would be single lots, which would provide opportunities for small-scale reuse such as side-lot adoption or community gardens.

Because foreclosures are a major cause of vacancy in stronger markets, limiting them could go a long way toward stabilizing these neighborhoods. “Not all distressed borrowers can avoid losing their homes,” explains law professor and financial services expert Patricia A. McCoy, “but in appropriate cases — where modifications can increase investors’ return compared to foreclosure and the borrowers can afford the new payments — loan modifications can be a win-win for all.”48 Loan modification and refinancing programs, augmented by foreclosure counseling, aim to keep owner occupants in their homes. Major initiatives in foreclosure prevention include two federal programs: the Home Affordable Modification Program (HAMP) and the National Foreclosure Mitigation Counseling program (NFMC). HAMP has processed more than 1.2 million permanent loan modifications since 2009.49 HAMP participants have high rates of redefault, however, reaching 46 percent in 2013 for modifications initiated in 2009.50 A 2012 assessment of HAMP found that although the program led to a modest reduction in the rate of foreclosures, it reached only about a third of eligible households and had an adverse effect on loan renegotiations outside of the program.51 Mayer et al. find better results for NFMC, concluding that the program improved loan quality for participants, reducing monthly payments by 7.8 percent.52 By keeping owner-occupants in their homes, foreclosure prevention programs can avoid many of the problems such as code violations (the visible signs of neglect) that arise once a property becomes vacant.

In partnership with community-based Operation Better Block’s Jr. Green Corps, Pittsburgh nonprofit GTECH Strategies engaged local youth to green this vacant lot in the Homewood neighborhood.
Photo courtesy: GTECH StrategiesVacant properties may require rehabilitation before they can be reoccupied. Healthy markets may offer private investors sufficient economic incentives to purchase, rehabilitate, and resell formerly vacant properties. In other cases, public subsidy or a nonprofit’s intervention may be able to turn a vacant home into an owner-occupied one. Although owner occupancy might be the most desirable reuse of foreclosed and vacated properties, investor activity, through both market sale and tax-foreclosure auctions, has opened up scattered-site rental of single-family homes as one way of dealing with still-habitable residences located in neighborhoods with sufficient rental demand. Danilo Pelletiere, former research director of the National Low Income Housing Coalition and current HUD economist, suggests that “the new and returning households that are needed to reduce vacancy and stabilize neighborhoods are most likely to be renters, whether by choice or from necessity, a trend that is already observable.”53 CDCs would also likely have an interest in acquiring tax-foreclosed properties and operating them as rentals, both to increase the stock of affordable housing and to stabilize the neighborhoods in which they have already invested. CDCs are likely to face significant challenges, however, in managing scattered-site rental properties, which by one estimate cost 25 to 30 percent more to manage compared with multifamily properties.54 “First look” programs allow nonprofits or a particular type of buyer, such as neighbors, to bid on REO or tax-foreclosed properties before other investors do. The National First Look Program gives Neighborhood Stabilization Program grantees the opportunity to acquire properties owned by Fannie Mae and Freddie Mac before they are offered to the highest bidder.55 In some instances, lenders or mortgage servicers may agree to rent to the former owners of foreclosed homes, offering some of the same benefits to the community as foreclosure prevention.56

Strategies to reoccupy vacant homes, either by owners or renters, depend on a neighborhood’s ability to retain and attract residents. Efforts to market a neighborhood can help stabilize housing markets and reduce vacancy and abandonment. The Healthy Neighborhoods Initiative of the Greater Milwaukee Foundation, for example, conducted tours of neighborhoods that it had targeted for image promotion, resulting in the sale of 22 vacant homes to first-time homebuyers.57 NeighborWorks America, a national housing and community development nonprofit, has recognized neighborhood marketing and branding as a strategy for strengthening housing demand and attracting private investment. In 2012, the organization worked intensively with 16 neighborhood organizations to aggressively market neighborhoods.58

Residential stabilization and revitalization would be aided and complemented by commercial revitalization in areas with markets strong enough to support it. Vibrant residential neighborhoods can better support neighborhood retail, and abundant retail options, in turn, will help attract and retain residents. “Rebuilding neighborhood retail should be planned comprehensively as an integral piece of the larger community that surrounds it, and it should be tailored to the realities of the area,” write Beyard, Pawlukiewicz, and Bond.59 They argue that public-private partnerships with a long-term commitment to reinvestment are necessary to rebuild neighborhood retail.60

The community of McAllen, Texas reclaimed this abandoned big box store as a new home for its main public library.
Photo courtesy: McAllen Public LibraryEven in neighborhoods with relatively healthy housing markets, however, selective demolition may be necessary when vacant properties are severely dilapidated. When the cost of rehabilitating a vacant or abandoned property exceeds its expected market value after rehabilitation, market-based solutions would be unlikely to result in remediation. Although a vacant lot typically has less adverse impact on surrounding properties than a vacant or abandoned structure, demolition programs could also plan for what to do with the vacant lot that remains once the structure is removed, such as turning the lot into a landscaped pedestrian pathway or bike trail, a park, a parking lot, or a community garden.61Research shows that the Pennsylvania Horticultural Society’s Philadelphia LandCare program, which clears and landscapes vacant lots, has improved residents’ perception of safety, reduced certain gun crimes, and boosted property values.62 Vacant properties that have been reused as community gardens, according to one study, have a positive effect on nearby property values up to 1,000 feet from the garden. The researchers find that these gardens can have the greatest impact in high-poverty neighborhoods.63

Strategies for Weak Markets and Shrinking Cities. In neighborhoods where housing markets are weak, where supply far exceeds demand, and in cities that are losing population, many of the strategies discussed above are unlikely to result in owner-occupied use of once-vacant properties. As Mallach and Brachman advise, “Cities such as Youngstown or Detroit, where 30 percent of their land areas are vacant — and which continue to lose population — need to think about land reutilization in fundamentally different ways than a city in which 10 percent or less of its land area is vacant, or where the city’s population appears to be stabilizing, such as Milwaukee or Newark.”64 Even cities with overall population stability or growth may still have neighborhoods or groups of neighborhoods in which markets cannot support revitalization strategies such as scattered-site rental housing or neighborhood marketing.

Cities that have lost half or more of their peak populations have a far larger housing supply, transportation and utilities infrastructure, and service area than they have people to use and pay for them. For decades, planners and politicians alike have attempted to grow their cities out of such problems. Increasingly, however, they are looking toward “rightsizing” or “smart decline” as a way to adjust city services and housing stock to suit smaller populations. Youngstown, Ohio and Flint, Michigan are two cities in which planners have explicitly acknowledged the need to adjust to declining populations.65 Rightsized cities will more efficiently allocate limited resources if, for example, residents are concentrated in denser areas, allowing the city to shunt infrastructure currently serving few residents. But, says Brent D. Ryan, professor of urban design and public policy at the Massachusetts Institute of Technology, rightsizing is a controversial, “yet-unproved process” that raises issues of equity, among others.66 City officials cannot force residents to relocate to denser areas, and creating incentives to encourage residents to leave their homes can be difficult. Even cities with rampant vacancy have residents scattered amidst otherwise empty blocks.67

The interventions that may be necessary to address vacant and abandoned properties in neighborhoods with weak markets and in shrinking cities include large-scale demolition and repurposing.68 Cities such as Buffalo, which in the 2000s conducted a “5 in 5” campaign to demolish 5,000 properties in 5 years, can barely keep up with the backlog of thousands of vacant properties.69 As noted above, demolition can be extremely costly. To aid state and local efforts to fund large-scale demolition, the U.S. Department of the Treasury has authorized the use of the Hardest Hit Fund (part of the Troubled Asset Relief Program) for demolition in 18 eligible states and the District of Columbia, although no funds had been expended for that purpose as of June 30, 2013.70 In Ohio, the attorney general chose to designate up to $75 million of the state’s share of the National Mortgage Settlement to reimburse counties for demolition. As of February 4, 2014, Ohio counties had expended over $65 million to demolish 8,390 units, with approximately $41 million of that total reimbursed by the attorney general.71 Although these funding sources are vital for communities struggling to keep up with demolition demands, they are not ongoing, so alternatives will be needed if large numbers of properties continue to be slated for demolition.

Large swaths of vacant land require large-scale repurposing strategies such as urban agriculture, woodlands, or parks and recreation facilities.72 Such green reuses promise the added benefit of improving stormwater management. Heavy rainstorms frequently overwhelm the combined sewer and stormwater infrastructure of many older cities, forcing them to dump untreated sewage mixed with stormwater into waterways at an estimated rate of 850 billion gallons annually.73 Diverting rainwater to these 13 repurposed properties not only addresses this significant environmental problem but also reduces air pollution and surface area temperatures, lowers municipal stormwater management costs, and enhances neighborhood aesthetics.74 Land banks can be especially effective in banking contiguous lots for larger repurposing projects (see “Countywide Lank Banks Tackle Vacancy and Blight”). Brownfields, which are common in former industrial centers, present opportunities for large-scale repurposing as open green or recreational spaces, community gardens or farms, or brightfields — sites for generating wind or solar power.75 Would-be developers of brownfields must consider the costs of site assessment, remediation, and liability against profit expectations, which can be limited by weak markets and other macroeconomic factors.76 Creative, organic, and sometimes temporary uses of vacant land emerge when neighbors and other residents act ahead of city governments, land banks, or developers (see “Temporary Urbanism: Alternative Approaches to Vacant Land”). In Brightmoor, a Detroit neighborhood with a high vacancy rate and a population of roughly 1,700, residents purchased or took responsibility for nearly 100 nearby vacant lots, consolidating them with their own property for their own use. Sometimes such organic use is illegal, as in the case of scavenging or squatting.77

 

Turning Liabilities Into Assets

Vacant and abandoned properties present daunting challenges to communities nationwide. Evidence shows that vacant and abandoned properties drag down local economies, impede population growth, depress property values, increase crime, and impose heavy cost burdens on local governments.

An example of successful brownfield redevelopment, the former Pfister & Vogel leather tannery (left) is now the site of The North End apartments along the Milwaukee River in downtown Milwaukee, Wisconsin (right).
Photo courtesy: Mandel GroupCities and communities are increasingly using data to inform the targeted deployment of limited resources and are addressing problem properties with a range of strategies that fit local market and demographic conditions. “What you have to be able to do,” says Alan Mallach of the Brookings Institution and the Center for Community Progress, “is to come up with ways to reuse the lots so that they will hopefully enhance, and at a minimum not detract from, the attractiveness of the neighborhood to homebuyers, investors, and rehabbers.”78 In some cases, such measures might spur redevelopment and economic revitalization. In other cases, it might be more appropriate to focus on managing decline in ways that improve the quality of life for those who remain. “Instead of cities focusing so much on growing, they should really focus on making themselves attractive and having the market respond to that,” says Justin Hollander, associate professor of urban and environmental policy and planning at Tufts University. “If a place becomes more desirable, it likely will lead to further growth in the future.”79

More research will be needed to empower policymakers, investors, and citizens to make evidence-based decisions on difficult choices, such as when to rehabilitate and when to demolish, whether to have a judicial or administrative foreclosure process, whether to convert a brownfield to an affordable housing development or a green space, or whether a particular area should pursue smart growth or smart decline. Innovative design techniques promise to expand the range of options for reuse. As practitioners experiment with creative new uses of formerly vacant and abandoned properties, researchers will need to evaluate strategies and determine which work and which do not, which are most cost effective, and which are most sustainable. More research will help decisionmakers become better equipped to turn problem properties into assets that will stabilize and revitalize neighborhoods and improve residents’ quality of life.

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A Victory in Glenville

Once a property sits vacant for three or four years, people sometimes become accustomed to an eyesore in the neighborhood. They have their own problems to deal with, after all. Eventually the city will come along and raze it…right?
Not in Cleveland’s East Boulevard Historic District! Glenville neighborhood residents do not give up so easily, and the newly renovated show place at 875 East Blvd. is their latest triumph.875_before
A victim of tax foreclosure, this single-family home had been forfeited to the Cuyahoga Land Bank with the agreement that Famicos Foundation would renovate the property. Famicos acquired the property from the Cuyahoga Land Bank two years ago and got to work. “This is the first home in a larger effort to recapture the neighborhood from the foreclosure crisis,” says Michael Palcisco, Project Manager for Famicos.
But it takes a village to rescue a neighborhood, and this 4,032 square-foot home had plenty of supporters. Ohio House District 10 Representative Bill Patmon got involved, helping to arrange a grant from the Ohio Development Services Agency to acquire, renovate and re-sell the property at market rate.
The first step was a full set of architectural plans for the 4-bedroom, 3½-bath home (project rendering displayed below). The house was gutted to the brick exterior structure, spray foam insulation was installed, interior walls were rebuilt and high-efficiency windows and HVAC systems were added. A new, tankless water heater added even more efficiency.
The renovation plan also added accessibility with a zero-step entry, 36-inch doorways, a walk-in shower and a second-floor laundry. “We tried to envision what an aging-in-place scenario would need,” Palcisco said875_rendering.
The property was sold as a market rate historic renovation.  The project could not have been accomplished without the outstanding effort of Allan Builders who partnered with Famicos Foundation on this extensive historic renovation project.
Palcisco doesn’t hesitate to credit the Cuyahoga Land Bank for its role in the project. “They’ve been an incredible partner in terms of property research, acquisition and lining up small grants.”
“We’re thrilled to work with them,” Famicos Foundation Executive Director John Anoliefo adds.
The new owner is relocating to Glenville and plans to live in the house. “He’s impressed by the friendliness of his neighbors, and their enthusiasm for Glenville’s resurgence,” Palcisco says.
For Famicos Foundation, the next projects are already completed or underway: renovating 13 historic doubles in the East 105th Street neighborhood; renovating several homes in the Ashbury Circle North area which were acquired with the assistance of the Cuyahoga Land Bank and renovating even more homes in the East Boulevard Historic District.

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Posted in 2014.3.1, Newsletter

Did You Know?: How does the Cuyahoga Land Bank use Technology?

In this FAQ video, Director of IT and Research, Michael Schramm explains that the Cuyahoga Land Bank has an in-house database called the Property Profile System (PPS) that contains current information on all properties in its inventory.  This system is linked to our public website.  Contractors also have access to this system so that they can log in, fill out a form, submit pictures and verify they have completed their job.  The Cuyahoga Land Bank also works with the Case Western Reserve University Center on Urban Poverty and their data system – NEO CANDO – to monitor foreclosures, property sales, demolitions, sheriff’s sales and other characteristics.  This tracking helps anticipate which properties will be coming into our Land Bank inventory.  Watch ‘How does the Cuyahoga Land Bank use Technology

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Posted in 2014.3.1, Didja Know?, Newsletter

Cuyahoga Land Bank Awarded $10.1 Million for Demolitions

On February 28th, the Ohio Housing Finance Agency (OHFA) announced that the Cuyahoga Land Bank and 10 other Ohio land banks would share $50 million in federal funds from the U.S. Treasury for the demolition of vacant and abandoned one – four unit residential structures. The competitive awards were based on factors including county population, the magnitude of vacant and abandoned homes identified for acquisition in the county, and the track record of the land bank. The Cuyahoga Land Bank received 20% of the total funds awarded.
Last summer Jim Rokakis, Director of the Thriving Communities Institute identified unused U.S. Treasury Hardest Hit Funding, initially awarded to Ohio and  11 other states to be used for mortgage loan modifications, as a possible source for demolition funding. Ohio had received $570.4 million in Hardest Hit funding in 2010. Working with Senators Sherrod Brown and Rob Portman, Governor Kasich, OHFA, and Ohio land banks, OHFA developed the Neighborhood Initiative Program (NIP).
Stressing the importance of this award, “NIP will go a long way in our battle to remove blight and stabilize neighborhoods;” said Gus Frangos, President and General Counsel of the Cuyahoga Land Bank. It is estimated that 800 residential properties will be demolished under the Cuyahoga Land Bank’s NIP program between April 2014 and June 2016.NIP_Logo

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Posted in 2014.3.1, Newsletter

Cuyahoga Land Bank Awarded $10.1 Million for Demolitions | A Victory in Glenville – Cuyahoga Land Bank News – 2014.3.1

Posted in 2014.3.1, Newsletter

Inner-city blight means greater tax burden on Cuyahoga County suburbs, study claims (Cleveland.com)

CLEVELAND, Ohio — A study released this week by the non-profit Thriving Communities Institute concludes that the epidemic of foreclosure, abandonment and blight in Cleveland and five inner-ring suburbs is responsible for a nearly $45 million shift in the tax burden to Cuyahoga County’s other 53 communities.

The study, which will be the subject of discussion at Cleveland City Council’s Development, Planning and Sustainability Committee hearing this morning, is based on an examination of assessed valuations on residential property since 2000, as well as tax rates. (See the full report in the document viewer below.)

According to the analysis of data from the Ohio Department of Taxation, the assessed value for residential property in Cleveland and five inner-ring suburbs considered to be “distressed”  — East Cleveland, Maple Heights, Garfield Heights, Euclid and Newburgh Heights — fell 33 percent between 2006 and 2012.

Values declined about 12 percent in the rest of Cuyahoga County.

Yet, suburban residents paid a disproportionately higher percentage of countywide taxes for the general fund, bond issues and social programs, as well as for the Cleveland Metroparks, Cuyahoga Community College and the Cleveland-Cuyahoga County Port Authority, the study states.

As property values rose before the recession, revenues from the countywide levies rose 63 percent. Conversely, when values dropped between 2006 and 2012, charges from countywide levies dropped four percent, too.

But voters continued to pass requests for new property tax increases to support countywide services — as thousands of properties in Cleveland and the inner-ring suburbs became abandoned.

As a result, according to the report’s analysis of tax records, charges assessed to property owners in Cleveland and the distressed inner-ring dropped 24 percent, while the outer-ring experienced a one percent increase.

The study goes on to project that in the future, requests for new countywide levies likely will be at a higher millage, as one mill generates less revenue than it used to. Currently, it would take a 1.13-mill levy to bring in the same tax revenue that could be generated by one mill in 2006, the study asserts.

Jim Rokakis, director of the Thriving Communities Institute said in an interview Monday that the study proves that abandonment and vacant properties affect every property owner in Cuyahoga County.

“This study confirms the fact that depressed property values in the City of Cleveland and certain inner-ring suburbs have shifted additional costs to more stable communities in Cuyahoga County, since countywide agencies are forced to seek larger levies to support their activities,” Rokakis said. “If you think because you live in Westlake or Solon that vacant properties are not your problem, you are mistaken.”

The report goes on to advocate for demolition as the solution to the problem, citing another recently released study that demonstrated that razing blighted houses boosts property values in all but the most devastated Cleveland neighborhoods.

Demolition has a profound stabilizing affect on declining neighborhoods and is a central component to any strategy to combat urban decay, the new report states.

Since 2006, Cleveland has spent nearly $59 million to demolish about 6,000 abandoned and condemned residential structures. The Cuyahoga Land Bank has committed another $27 million to demolish more than 2,400 houses in Cleveland, East Cleveland and other communities.

Cuyahoga County Executive Ed FitzGerald, at his state of the county address last month, announced that he would seek the ability to borrow up to $50 million to demolish abandoned property. But County Council is yet to vote on the initiative.

Joel Ratner, president and CEO of Cleveland Neighborhood Progress, which helped fund the study, said in an interview Monday that he hopes its findings will help “connect the dots” for any county council members who might be unconvinced that blight in the inner city affects their suburban constituents.

“I think too many people have said, ‘This is an urban problem,’” Ratner said. “We now know that it’s not at all. Anyone who uses the county library system or the Metroparks or any service that is connected with a countywide levy needs to understand that, unless we deal with this, we’re going to have more challenge in funding those institutions.”

Cleveland City Councilman Tony Brancatelli, who also is board chairman of the Cuyahoga Land Bank, said the analysis has the power to motivate public officials countywide to help lobby for state and federal funding for demolition. And he hopes it will urge the county to issue more bonds than the $50 million FitzGerald offered up last month.

“As a first step, I certainly love it and am appreciative,” Brancatelli said. “But doing this slowly and in small amounts is not going to keep up with this ever-growing problem. We have to be very aggressive.”

Stay tuned to the comments section below for live coverage of the Development, Planning and Sustainability Committee hearing, beginning at 9:30 a.m.

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Cuyahoga Land Bank changes blighted properties into opportunities (Cleveland.com)

Some people think wejust like to knock down houses,” said William (“Bill”) Whitney, chief operating officer of the Cuyahoga Land Bank. “But we are here to get rid of bad apples and bad properties. The last thing any of us here want to have happen is for a house to go right back into the hands of flippers or those who can’t take care of it.”
The Cuyahoga Land Bank (Cuyahoga County Land Reutilization Corporation) was created in 2009 as a non-profit entity to “address the foreclosure crisis and deal, unfortunately, with the large number of properties that have to be demolished,” according to Whitney.
“But we pride ourselves in the number of homes we have been able to get back on the market by working with a number of both for-profit and non-profit developers. We have helped get more than 800 renovations throughout the county since 2010,” said Whitney.
The Cuyahoga Land Bank’s purpose is to acquire blighted properties and return them to productive use by: rehabilitation, sale to new private owners, demolition, preparation for traditional economic development, or creative re-use, including gardening, green space, storm water management or other ecological purposes.
Cleveland Land Bank is funded by a variety of sources, including the penalties and interest collected on delinquent real estate taxes and assessments, as well as grants from the organization’s partners. It collaborates with Cuyahoga County and all its 59 municipalities and The City of Cleveland’s Land Bank as well as many partners including social organizations. Programs are also offered to assist veterans, immigrants and other special needs groups.
Cuyahoga Land Bank houses available to the public to purchase and renovate are listed on the organization’s website (www.cuyahogalandbank.org). The houses are sold to qualified owner-occupants and professional rehabilitation contractors. Homes that need only minor renovations are offered exclusively to owner-occupants for the first 30 days through the Owner Occupant Buyer Advantage Program. A number of other renovation programs are also available.
Consumers who wish to buy a renovated home will also see a variety of relatively low-cost homes offered on the website. According to the Cuyahoga Land Bank, a homebuyer can generally afford a home worth about three times his or her annual household income. For example, if your income is $50,000, you may be able to afford a $150,000 home, taking into account other debt, credit score, size of down payment and other factors.
“If someone is interested in buying a home through us, he or she should go to the website, walk through the application process and understand clearly what is expected of them,” said Whitney.
The chief operating officer also sees more people being gradually interested in several other transactions that the Cuyahoga Land Bank offers. One of those is the Side Lot Program, designed to allow residents, garden groups and non-profit organizations to acquire vacant lots.
To be eligible, the applicant must live in and own a property adjacent to the lot, be current on all property taxes and have no current housing or zoning violations. The lot must be vacant with no structures. Letters of support must also be obtained from the appropriate City of Cleveland councilman or suburban city officials.
Whitney believes the efforts of the Cuyahoga Land Bank increase property values and improve the quality of life for all county residents.

Cuyahoga Land Bank Collaborations and Partnerships
(partial list)
HUD/ Fannie May
Court Community Service
City of Cleveland
Cuyahoga County
North East Ohio
Regional Sewer District
Polish American Cultural Center
ESOP-Concerned Citizens
of Mt. Pleasant
Eden, Inc
Purple Heart Homes
LiveCleveland
Koinonia Homes
University Circle, Inc.
Cleveland Housing Network
Cleveland Clinic
Cleveland Restoration Society
LakewoodAlive
Cuyahoga Metropolitan
Housing Authority
HELP Foundation

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Estimating the Impact of Fast-Tracking Foreclosures in Ohio and Pennsylvania (Federal Reserve Bank of Cleveland)

All the signs in the housing market seem to be pointing the right way, except the amount of time loans are spending in the foreclosure process.  Foreclosure fast-tracks for vacant homes in foreclosure may help reverse that trend.

In recent months housing markets have shown real signs of life: home prices, home purchases, and housing starts are up, while foreclosure inventories, foreclosure starts, and loan delinquencies are down. But in states that handle foreclosure through the courts (rather than nonjudicial trustee’s sales), the lingering effects of the foreclosure crisis may be costing taxpayers money and dragging down the recovery. In those states, the amount of time loans are delinquent before they enter foreclosure and the amount of time loans spend in the foreclosure process are rising.

Anecdotally, many explanations have been offered as to why this is happening. Loan modification programs may explain some of the increase in duration, as lenders work with borrowers in an attempt to modify the loan while the borrowers are delinquent or in foreclosure instead of proceeding to judgment. State-specific requirements, such as the lender having to produce the original note and mortgage may delay or prevent some foreclosures on delinquent loans. Shrinking budgets may be making it difficult for the courts overseeing the cases or the sheriff’s offices overseeing the property auctions and deed transfers to process foreclosures in a timely way. Selective foreclosure, which avoids low-value properties, may also be a contributing factor, shifting the costs of those properties from the lender to communities and taxing districts.

These problems are intensified when a home that is in the judicial foreclosure process is vacant. States with judicial foreclosure have longer foreclosure timelines than nonjudicial states. When the home is vacant, the cost of the extended judicial foreclosure process has no corresponding benefit, generating deadweight losses.

Recently, some judicial foreclosure states have passed laws that attempt to “fast-track” foreclosures if the property has been abandoned by the homeowner, and others have begun considering similar fast-track laws. This Commentaryexplores the economic reasoning behind fast-tracking and estimates the size of the deadweight loss that could be eliminated by creating an effective foreclosure fast-track in Ohio and Pennsylvania, two states in the Federal Reserve Bank of Cleveland’s District.

The Judicial Foreclosure Process

Requiring that foreclosures be conducted through the courts is a policy decision that has passionate advocates on both sides of the issue. Those that do require it—judicial foreclosure states—have decided that certain safeguards are required before real property can be taken from an owner by a creditor because of a default on a secured loan or by a taxing authority for failure to pay property taxes. In these states creditors and taxing authorities must proceed through the courts, which make sure they have the right to foreclose and the borrower has no legal defenses to foreclosure.

Legislatures have decided that protecting the rights of property owners is worth the higher cost of judicial foreclosure relative to nonjudicial foreclosure. These costs may change depending on whether homes stay occupied or are vacated by the owners during the foreclosure process. When a home in foreclosure remains occupied, the costs may only include the lost value of the creditor or taxing authority’s capital investment in the property (which does not earn a return during the foreclosure process), the litigation costs of all parties to the foreclosure, and the court’s time. But when a residential property in foreclosure is vacant, this calculation may change.

When the foreclosure sits vacant, there are additional costs to the creditor or taxing authority due to the accelerated depreciation of unoccupied homes, which are less well maintained and more likely to be vandalized or, in some cases, stripped of metal to sell for scrap. There are additional costs to the community when unoccupied homes create health and safety hazards and cause surrounding homes to lose value. In states that allow deficiency judgments such as Ohio and Pennsylvania, there are potentially further costs to the vacated homeowners, who will be liable for the difference between the price the creditor or taxing authority eventually receives for the home and the unpaid loan amount. Finally, any loss in property values will hurt municipalities or school districts funded in whole or in part by taxes on the value of real property.

Who bears these costs, in the end, depends on whether the foreclosure is completed. When the foreclosure is abandoned, costs are imposed on the community and taxing districts. The abandoned property is not easily rehabilitated due to the lender’s lien on the property. When abandoned properties are taken through foreclosure and sold, these costs are born primarily by the lender through rehabilitation costs or lower sales prices.

Most importantly, there is no obvious beneficiary of these costs. Communities and taxing districts face the externalities associated with vacant property: lower surrounding home values, increased crime, and reduced property tax collections. Homeowners who leave properties vacant are essentially resigned to the fact that they cannot dispute the right of the creditor or taxing authority to take the home through the foreclosure process, and as such gain no benefit from its use. Lenders receive no benefit from the judicial foreclosure process above the benefits they would receive through a nonjudicial process.

These deadweight losses—costs without corresponding benefits—are what legislatures in judicial foreclosure states have attempted to address by creating foreclosure fast-tracks. At least five states have created foreclosure fast-tracks for private mortgage foreclosure on abandoned property since 2010.1 Ohio created a private mortgage foreclosure fast-track for tax-foreclosure in 2006,2 and the Ohio legislature is considering a pilot foreclosure fast-track for properties abandoned by the homeowner.1 But there has been no economic analysis to determine the potential impact of a well-designed foreclosure fast-track.

Assuming a Close-to-Ideal Foreclosure Fast-Track

We estimate the potential for savings that an efficient and effective foreclosure fast-track could provide in Ohio and Pennsylvania. The savings would come from shortening the amount of time that vacant properties spend in foreclosure and eliminating the deadweight losses lenders suffer. To estimate these savings, we need to know three things: how many foreclosures might be affected (the number of homes in foreclosure that sit vacant), the daily deadweight losses associated with these homes, and time that could be shaved by fast-tracking.

Unfortunately, there is no single database that has all this information, so constructing our estimate is a multi-step process. We start by making several assumptions. We assume that an ideal fast-track for private mortgage foreclosure would only apply to homes in foreclosure that owners have vacated, it would be used on 100 percent of those properties, and it would cut the total foreclosure time—specifically, from the time the foreclosure is filed with the court to the point where the lender takes ownership of the property—down to two months.

The validity of these assumptions depends entirely on how the law is written. Typically, foreclosure fast-track laws require more than simple vacancy in order to qualify for the fast-track, which protects against the fast-track being misused but may prevent all vacant foreclosures from being eligible for fast-tracking. In some cases, qualification is based on criteria that would correlate with a vacated home (shut-off utilities and housing code violations, for example), so generally there should be a high correlation between vacancy and fast-track qualification. Additionally, once a foreclosure judgment is issued, the fast-track would have to transfer the property to the lender directly, or an expedited foreclosure auction and deed transfer process would be required.

A 100 percent utilization rate of a foreclosure fast-track also depends on how efficiently the process is designed: the faster and easier it is to use, the more it will be used. It is worth noting that a common anecdotal complaint by creditors’ counsel is that recently-passed foreclosure fast-tracks are difficult to use.

Another practice that may prevent 100 percent utilization is strategic foreclosure. Strategic foreclosure refers to foreclosures that are started but never completed or foreclosures that are never started because the lender determines that the home has little value. They usually occur when the home sits vacant and depreciates to the point that it would cost more to foreclose upon and maintain than could be recovered by selling the property. There is some empirical evidence suggesting that this has occurred in very weak markets.4 And anecdotally, local governments and communities have reported an increase in foreclosures that start but are never completed. A foreclosure fast-track does not completely address strategic foreclosure. It may lower the cost of foreclosure for lenders, but if the property has an extremely low net present value, lowering the cost of foreclosure may still not be enough to make completing the foreclosure worthwhile. A fast-track law could be constructed with features that ensure foreclosures that have started are completed, but the response to that might be to not initiate foreclosure on low-value properties, in which case the problem will persist.

Finally, bringing the fastest foreclosures down to two months also seems possible. The quickest foreclosures in Ohio and Pennsylvania are completed typically in five to six months (figures 1 and 2). This is a measure of the time that loans spend in foreclosure before they enter the lender’s real estate owned portfolio or are sold. In the case of vacant foreclosures, a fast-track could move the process down to a single hearing, and if the homeowner does not respond to the foreclosure filing, the property could be directly transferred to the lender or move to an accelerated sale. This process would be similar to the fast-tracked property tax foreclosure framework currently used in Ohio.

Estimating the Number of Vacant Foreclosures

To determine the number of vacant homes in foreclosure in Ohio and Pennsylvania, we have to combine data from two different sources. Lender Processing Services (LPS) provides an estimate of the share of first-lien loans that are in foreclosure in each state. RealtyTrac provides an estimate of the share of homes in foreclosure that are vacant in each state. Combining the two estimates will give us an idea of how many foreclosures might be affected by fast-tracking. We also use LPS data to calculate the average duration of the foreclosure process, which we need to estimate the amount of time that fast-tracking could save in the foreclosure process (average duration minus our two-month assumption).

RealtyTrac determines the share of vacant foreclosures by cross-referencing the addresses of properties in foreclosure with US postal data. Those foreclosed properties that have left forwarding addresses or have been designated as vacant by the postal service are considered vacant foreclosures by RealtyTrac. In Ohio, roughly 20 percent of homes are vacant while they are in foreclosure according to this estimate, while in Pennsylvania the ratio is closer to 16 percent (table 1).

Table 1. Around 20 Percent of Homes in Foreclosure Are Vacated by Owners in Ohio, 16 Percent in Pennsylvania

  Vacated by the owner, percent
Q1 Q2 Q3 Q4
Ohio 21 19 19 19
Pennsylvania 17 17 16 15

Source: RealtyTrac. This data can be purchased at http://data.realtytrac.com/.

To calculate the average duration of the foreclosure process, we start by identifying all loans that exit the foreclosure process by entering into a creditor’s real estate owned portfolio or by being sold by the creditor. Then we count how many consecutive months those loans were marked as “in foreclosure” by the creditor.

One challenge of our approach is that RealtyTrac counts the number of homes in foreclosure, while LPS counts the number of first-lien loans in foreclosure. These sets will not correlate perfectly for a few reasons. First, they count foreclosure slightly differently—LPS relies on monthly self-reporting from servicers, while RealtyTrac counts a home in foreclosure from the day the notice of default is issued through the day the notice of sale is issued. The RealtyTrac set also focuses on homes, so it may include foreclosures that do not have an associated mortgage loan (property tax foreclosures, for example). Despite these minor differences, we feel the sets are similar enough to export the rate of vacant foreclosures from one to the other.

Estimating the Impact

Using the vacant foreclosure rate of 20 percent for Ohio and 16 percent for Pennsylvania, we estimate that both states would likely experience a substantial reduction in foreclosure inventories if they had had a fast-track in place at the end of 2012. If Ohio had passed a foreclosure fast-track, the foreclosure inventory in Ohio would be about 0.5 percentage points lower—less than 2 percent instead of just under 2.5 percent (figure 3). Pennsylvania would see similar results (figure 4).

Calculating the impact a fast-track would have on the amount of time loans spend in foreclosure in each state is not as straightforward. We do not know which loans would be eligible for a fast-track, so we created three scenarios.

  • Scenario 1. We applied the fast-track to the loans in each state that are already moving through the process most rapidly.
  • Scenario 2. We applied the fast-track to the loans closest to the average durations without the fast-track (40th to 60th percentile in Ohio and 42nd to 58th percentile in Pennsylvania).
  • Scenario 3. We applied the fast-track to the fastest loans in each quartile or the first five percentiles of each quartile (0-5, 26-30, 50-55, 76-80) in Ohio and the first four percentiles in Pennsylvania (0-4, 26-29, 50-54, 76-79).

In Ohio these scenarios shave between 8 and 43 days off of the average duration (figure 5). In Pennsylvania durations are lower overall, and the scenarios create a narrower range of 9 to 20 days shaved off of the average foreclosure duration (figure 6).

It is worth noting that this simple method may underestimate the impact a fast-track would have on durations, because it assumes that all noneligible loans would continue to move through the process at their current pace. That seems unlikely, as freeing up judicial resources via the fast-track should help reduce the time even non-fast-tracked loans spend in foreclosure.

Finally, we attempt to put a dollar figure on the deadweight loss eliminated by the use of a foreclosure fast-track. This is by far the most challenging part of this analysis because these costs cannot be observed directly in the data we have.

The cost to homeowners, communities, and taxing authorities cannot be reasonably estimated because we do not observe them directly or indirectly in either of the data sets used in this analysis. Other research suggests that the savings to these entities would be substantial. Whitaker and Fitzpatrick (2013)5 find that in Cuyahoga County, Ohio, each vacant property lowers the sale prices of surrounding homes by $1,300 to $2,300. If a fast-track was able to reduce the amount of time homes spend vacant by speeding them through the foreclosure process and eventually to new owners, they would no longer be vacancies that reduce the sales prices of surrounding homes.

Similarly, if a fast-track could prevent vacant foreclosures from depreciating to the point of abandonment in the foreclosure process, those abandoned homes would not lower the sale price of surrounding properties by $700 to $6,000. But exact estimates would require different data to allow us to view the spatial distribution of vacant foreclosures in Ohio and Pennsylvania, the strength of the housing submarkets they are in, and the housing density in those markets.

Additionally, Cui (2010)6 estimates that spells of residential vacancy in Pittsburgh exceeding six months result in significantly higher rates of violent crime in their immediate vicinity. It follows that reducing the time homes spend vacant in the foreclosure process to less than six months could reduce the instance of violent crime in the surrounding area, but no dollar figure can easily be placed on this effect, and it cannot be measured with precision.

We do not directly observe the costs to creditors, but they can be estimated by looking at creditors’ daily carrying costs for the property they own. These carrying costs are calculated for creditors’ REO portfolios and include ongoing maintenance, taxes, repairs, and code-violation citations for the residential properties they own. They include some fixed costs that are averaged over the few months lenders typically own properties after foreclosure. While not a direct observation, they likely reflect the extra attention creditors must pay to vacant foreclosures to maintain them, or the depreciation of vacant properties (resulting in lower sale prices) that are unmaintained. Nationally, creditors’ carrying costs are estimated to be between $25-$100 a day.7 Conversations with loan servicers working in Ohio and Pennsylvania suggest costs in those areas are closer to $50-$100 a day.

Taking the average of the daily carrying-cost range for Ohio and Pennsylvania, multiplying it by the average time saved under each scenario and the number of loans in foreclosure in each state brings us to an estimated annual savings for each state, had a foreclosure fast-track been in place at the end of 2012. In Ohio, the annual savings from a foreclosure fast-track is estimated to be between $24,000,000 and $129,000,000 (table 2). In Pennsylvania, the annual savings from a foreclosure fast-track is estimated to be between $24,000,000 and $54,000,000 (table 2). It is important to emphasize that this is an elimination of deadweight losses, rather than a shifting of costs. That is, these costs already exist and benefit no one.

Table 2. Fast-Tracking Could Have Saved Creditors $24 Million to $129 Million in 2013

Days saved
(A)
Daily carrying costs, dollars
(B)
Number of loans in foreclosure
(C)
Total cost savings, dollars
(AxBxC)
Scenario Ohio
1 8 75 40,000 24,000,000
2 31 75 40,000 93,000,000
3 43 75 40,000 129,000,000
Scenario Pennsylvania
1 9 75 36,000 24,300,000
2 14 75 36,000 37,800,000
3 20 75 36,000 54,000,000

Source: RealtyTrac; Lender Processing Services; authors’ calculations.

These savings to creditors raise the question of why creditors do not simply fund adequate staffing in the proper local government offices and hire additional attorneys of their own to move vacant homes through the foreclosure process faster. There are two reasons why this does not happen, one economic and one legal.

Economically, these savings are spread over a large number of lenders prosecuting a large number of foreclosures in a large number of courts throughout the states of Ohio and Pennsylvania. Determining where lenders need additional attorneys, and which courts require additional staff, would be an expensive proposition. It creates a classic collective-action problem, where no one lender would save enough to return their investment. Even in the absence of this collective-action problem, there are legal barriers (statutorily prescribed notice and hearing requirements and accompanying periods laid out by rules of civil procedure) that would prevent homes from being accelerated through the foreclosure process. Even if it were feasible for creditors to fund adequate staffing in the proper local government offices, it would not be a substitute for an act of the legislature creating a usable foreclosure fast-track for vacant foreclosures.

Conclusion

All the signs in the housing market seem to be pointing the right way, except the amount of time loans are spending in the foreclosure process. Foreclosure fast-tracks for vacant homes in foreclosure may help reverse that trend.

The data suggest that the foreclosure rate could be substantially lowered and tens of millions of dollars of annual deadweight losses could be eliminated in Ohio and Pennsylvania annually by creating efficient, effective foreclosure fast-tracks for vacant properties. Crafting legislation that adequately balances the interests of creditors and homeowners while meaningfully fast-tracking foreclosures is no simple task, and would likely require the input of creditors, communities, foreclosure attorneys, and the judiciary.

Footnotes

  1. See “Policy Considerations for Improving Ohio’s Housing Markets,” Federal Reserve Bank of Cleveland Staff Report, 2013.[Back]
  2. Ohio Revised Code §323.65 et seq.[Back]
  3. Ohio House Bill No. 223, 130th General Assembly, 2013-2014.[Back]
  4. Stephan Whitaker and Thomas J Fitzpatrick IV, 2013. “Deconstructing Distressed-Property Spillovers: The Effects of Vacant, Tax-Delinquent, and Foreclosed Properties in Housing Submarkets, Journal of Housing Economics, 22(2): 79-91.[Back]
  5. See footnote 4.[Back]
  6. Lin Cui, 2010. “Foreclosure, Vacancy, and Crime,” University of Pittsburgh Department of Economics, working paper.[Back]
  7. Andrew Jakabovics, 2012. “What Sells When: Analyzing Price and Time Patterns for Single-Family Homes to Identify Best Practices for Aggregating REO Properties for Bulk Sales,” Enterprise Community Partners, working paper.[Back]

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Renters could get more rights against foreclosure-related evictions (Plain Dealer)

WASHINGTON, D.C. – To get evicted through foreclosure is dispiriting enough.  But to lose your house or apartment through foreclosure when you merely rented – and you paid your rent on time – ought to be permanently illegal, say Congress members who are pushing for permanent protections for renters.

U.S. Sen. Sherrod Brown brought the spotlight to that effort today at a Cleveland news conference. Brown is a cosponsor of a bill that would permanently extend the Protecting Tenants at Foreclosure Act of 2009, which gave temporary protection against eviction to families renting houses that went into foreclosure. These renters make up about 40 percent of occupants affected by foreclosure, according to Brown’s office and housing advocates.

“Tenants who work hard, and responsibly pay their rent each month, deserve protections for themselves and their families,” Brown said.

The problem is that they paid their rent to landlords who failed to make mortgage payments. The landlords pocketed the rent or spent it elsewhere, defaulting on their mortgages. Until 2009, if the houses were foreclosed upon and resold, almost always at a discount, the new owners could evict the tenants, often giving the renters no recourse and little notice to move. The new owners, including housing speculators hoping to profit on their bargain purchases, had other plans for the homes.

This happened so frequently that “two of my staffers who are single mothers had less than 30 days” to find new apartments, said Roslyn Quarto, executive director of Empowering and Strengthening Ohio’s People, or ESOP, a housing counseling group.

The 2009 law ended that by saying if the tenants had leases and were abiding by their terms, the new owners had to honor those leases. There was an exemption if the new owners intended to occupy the properties, but it required giving the tenants 90 days’ notice before eviction. The law had provisions to assure that these leases were legitimate and not ruses to let the previous owners or their relatives stay in the homes.  

That bill, whose bipartisan supporters included Dayton Republican Rep. Mike Turner, was supposed to expire in 2012 but the Dodd-Frank financial reforms of that year extended the protections to the end of 2014. Democratic lawmakers led by Sen. Richard Blumenthal of Connecticut and Rep. Keith Ellison of Minnesota late last year introduced bills to extend the protections permanently, and Brown joined Blumenthal as a cosponsor and talked up the bill this morning.

So far, no Republicans have signed on as co-sponsors. Groups such as ESOP and the National Low Income Housing Coalition say they cannot imagine why anyone would oppose permanently preserving tenants’ protections, since tenants would still be bound by their leases, providing rental income to the new owners. And the new owners still could kick out the tenants – after three months – if they really wanted to live in the homes.

But people familiar with the bill say that tenants would gain a new protection in the latest legislation that they currently don’t have: the explicit right to sue the new owners if they believed the owners violated the law. Tenants would have what is called a “right of action.” The current law allows tenants to complain to federal housing and lending authorities, which have found very few violations, but it gives the tenants no explicit right of their own other than a possible defense if they fight the eviction.

The new law would give them a clear right to sue.  That raises the possibility of more political opposition this time.

The prospect of a new right to sue could bother Republicans who have wanted to limit the number of lawsuits of all kinds and have pushed for tort reform, according to a House staffer familiar with the bill. Republicans hold a majority in the House, and Democrats control the Senate.

The bill would normally require hearings in the House and Senate financial services committees, but the House committee has been reluctant to take up legislation pursued by Democrats.

A spokesman for the House Financial Services Committee has not yet responded to a request for comment. Turner’s office has not yet responded to a question about whether he will cosponsor the newest bill.

Ohio was at the forefront of the foreclosure crisis that led to various housing reforms, and problems persist. In January, 9,748 properties in Cleveland were in some stage of foreclosure, according to the firm RealtyTrac. In Cuyahoga County, the foreclosure rate for January was one in every 622 housing units, and it was one in every 242 in Maple Heights.

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Slavic Village on the road to recovery (WOIO)

CLEVELAND, OH (WOIO) -

Slavic Village Recovery (SVR) says two completely renovated properties have been sold and are homes to proud families on E 54th Street. With more homes currently under construction and a group of eager buyers, SVR anticipates welcoming many more new residents to Slavic Village in the coming year.

Two additional homes will be sold as soon as early February.   

“On behalf of the Slavic Village Recovery Project, we are thrilled to welcome these families to Slavic Village,” said Robert Klein, project creator and partner.  ”When this community has truly been revitalized and hundreds of new residents call Slavic Village home, one of our greatest achievements will be providing homeowners with quality affordable housing.”
Both newly purchased homes were sold for less than $63,000 and underwent complete renovations.  Monthly mortgages are less than $500 including taxes and insurance.
Asked about her experience with the Slavic Village Recovery team, Bev Langl said,  ”Christina and Jeff could not have worked any harder, and I don’t think I could have done it without them. They went above and beyond.  Not only did they provide a beautiful home, they also introduced me to a church volunteer group who moved me in.  I love my home, and feel very welcomed by the community.”
The SVR expects to renovate close to 200 homes in the area to support the transformation of Slavic Village.
Interested homebuyers should contact SVR Project Director, Jeff Raig at 216.641.2586 or email JeffR@slavicvillage.org.
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Canton awarded more than $4 million in demolition funds (WKSU)

Cities in Northeast Ohio are getting about $27 million to help demolish abandon homes in their communities.

Canton was given more than $4 million of the money from the U.S. Department of the Treasury’s “Hardest Hit” fund.

Assistant City Council Majority Leader Chris Smith of Ward 4 says she is proud that her city was awarded this funding, especially because her area has a lot of abandoned homes.

“A lot of the people that moved there have either moved out of the area. Or maybe were Senior Citizens who are no longer living,” Smith said. “It has given our ward a greater sense of pride with the cleanup and the demolition of houses.”

Smith says the money will also be used to demolish any structural buildings that have been abandoned such as schools or offices. She says that it will open up the opportunity for businesses to move in.

Ohio is getting about $50 million total in federal funds.  for demolition. The largest piece of that — $10.1 million — is going to the Cuyahoga County Land Bank. The county has between 10,000 15,000 blighted properties. The Ohio Housing Finance Authority says Mahoning County will get $4.2 million, Lorain County will get $3 million and Summit County will get $2 million.

More federal demolition money is on its way later this year, and Cuyahoga County Executive Ed FitzGerald said earlier this month that he plans to borrow up to $50 million for additional demolitions.  The average grant per-demolition is $12,000.

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Tax dollars to demolish blighted properties a smart investment in stabilizing neighborhoods: editorial (Plain Dealer)

It is a cold day in Ohio – and maybe the netherworld – when government so clearly works for the common good.

It happened on Friday – high teens, low 20s – for certain, when the Ohio Housing Finance Agency, which administers the Hardest Hit Funds, a federal foreclosure prevention initiative, announced that 11 counties and cities would receive $49.5 million to stabilize neighborhoods through strategic demolition of blighted properties.

“It’s a real big deal,” said Jim Rokakis, architect of the demolition funding strategy and director of the Thriving Communities Institute at the Western Reserve Land Conservancy.

Cuyahoga County will receive the biggest chunk of cash — $10.1 million – as befits Ground Zero of the property apocalypse.

At least 12,000, and as many as 15,000, eyesores (and potential crime scenes)  deserve the wrecking ball throughout the county, Rokakis estimated.

The latest infusion of federal dollars will help address the giant sucking sounds that used to be neighborhoods, but it is not enough.

The average cost of a demolition is $12,000, according to Frank Ford, senior policy adviser at the institute. The $10.1 million allocation is expected to raze 841 distressed properties.

That leaves a lot of zombie properties standing, and underscores the urgency for County Executive Ed FitzGerald to deliver on his promise last month of $50 million in new county bonds to demolish homes and “protect and restore our neighborhoods.”

FitzGerald needs to provide a comprehensive plan to County Council – when will the bonds be issued and other key details – and council needs to approve the request.

A recent study – commissioned by the institute and funded by multiple stakeholders, including Cleveland City Council and Ohio Attorney General Mike DeWine – demonstrated that strategic demolition of blighted structures stabilized and increased real estate values, decreased foreclosure rates and lessened tax delinquencies.

How compelling was the study?

It convinced the Treasury Department to free up Hardest Hit funds — earmarked to help homeowners avoid foreclosure and keep a roof over their heads – for other foreclosure prevention strategies such as demolition. Last August, $60 million in Ohio was diverted for that purpose.

A second round of allocations for the remaining $11.5 million will be held this summer, according to an Ohio Housing Finance Agency spokeswoman.

Also in the works is bipartisan legislation introduced by U.S. Reps. Marcia Fudge, a Warrensville Heights Democrat, Marcy Kaptur, a Toledo Democrat, and David Joyce, a Russell Township Republican, that would permanently allocate Hardest Hit funds for strategic demolition nationwide.

Read the original article here: http://www.cleveland.com/opinion/index.ssf/2014/03/tax_dollars_to_demolish_blight.html

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Judge Burt Griffin visits Cuyahoga Land Bank on the 50th Anniversary of the Kennedy Assassination

Did Oswald act alone?  Were there accomplices?  Was it the CIA, Cuba, the Russian KGB?  Fifty years after the assassination of President John F. Kennedy, these questions continue to perplex baby boomers and intrigue younger generations.
Our own Cuyahoga County Common Pleas Judge Burt Griffin was appointed to the Warren Commission shortly after the Kennedy Assassination.  The Warren Commission was established by President Johnson and Congress to investigate the circumstances surrounding the Kennedy Assassination.
Judge_GriffinAs a special year-end staff event, the Cuyahoga Land Bank invited Judge Griffin to speak to the staff to hear first hand accounts from somebody who actually served on the Warren Commission and had access to the best evidence and information available.
So after 50 years of intrigue, conspiracy theories and Oliver Stone movies, what was Judge Griffin’s conclusion about the assassination? After a lively discussion and some great question and answers amongst staff and Judge Griffin, the Judge reaffirmed his view that Oswald acted alone as the Warren Commission had originally found.  He indicated that no new concrete evidence had surfaced over the years that would change that conclusion.  Judge Griffin explained the day-by-day chronology of Oswald’s activities just prior to and after the assassination.  Although some Cuyahoga Land Bank staff skeptics still remain, he made a pretty darn good case for the “Oswald acted alone” theory.
Although people will probably continue to question the Kennedy assassination theories for decades to come, it was a real treat to have Judge Griffin’s engaging style and knowledge which he graciously shared with Cuyahoga Land Bank staff.

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Land Banks have proven to be effective fighters of blight (Crains Cleveland Business)

In the five years since the Cuyahoga Land Bank was created to address the problem of vacant, abandoned properties across Cuyahoga County, the nonprofit agency has demolished about 2,000 blighted properties and facilitated the rehabilitation of approximately 750.

 

It’s progress, says Gus Frangos, president and general counsel of the land bank, who adds that Cuyahoga County’s model is spreading to other places.

 

“That’s 2,000 root canals that were just blighting whole communities,” he says.

Of course, there’s still much more work to be done.

The problem of vacant properties was years in the making, and it won’t be solved overnight. In the city of Cleveland alone, there are about 8,000 homes that stand empty and in need of demolition. Throughout Cuyahoga County, the number rises to more than 20,000 homes.

A recent study commissioned by Cleveland City Council confirmed that demolition leads to reduced foreclosures, stabilizes real estate values and lessens tax delinquencies. Countywide land banks, facilitated by a 2008 state law and funded by penalties on delinquent property taxes, are the primary tools communities have to fight blight.

The Cuyahoga Land Bank is Ohio’s largest, with a budget of about $12 million per year. While the majority of the properties it receives through foreclosure filings are eventually demolished, the agency has found creative ways to attract qualified investors. Frangos says that more than 40% of the homes the agency has acquired have been rehabbed.

Still, he doesn’t shy away from spreading the message that more demolition will be needed before Northeast Ohio’s real estate market stabilizes and returns to normal.

“There are studies about what happens when you knock down blight, but I don’t need a study to tell me this is really positive stuff,” he says. “For the person that’s next to that house, that’s all they need to know. Their world ends at the end of their driveway.”

Working together

One way that the Cuyahoga Land Bank has achieved success is through creating partnerships with other organizations. For instance, it worked with the nonprofit International Services Center to renovate homes for refugees in Lakewood.

That’s just one example. The land bank also has partnered with veterans organizations to rehab housing for veterans, disabilities groups to renovate homes for people with disabilities, and local suburbs in order to offer incentives to owner-occupants.

In North Collinwood, a partnership with the Northeast Shores Development Corp. has resulted in 20 homes being sold to artists who are revitalizing the area.

“This kind of strategy allows neighborhoods to really take root and build off of success,” says Frangos. “It’s not one here and one there — you’re really part of a neighborhood.”

Thanks to the land bank’s research capabilities, the agency also has helped the tax foreclosure process, steering prosecutors toward properties that are most blighted.

When someone buys a property, the land bank’s deed-in-escrow program ensures that the title isn’t transferred until work is completed. “We’ve only had a few mishaps,” he says.

The Cuyahoga Land Bank also helps local communities reposition blighted sections of neighborhoods to clear the way for future growth. One example is North Coventry in East Cleveland, where the land bank is planning to demolish about 60 properties.

The North Coventry push came about when leaders from East Cleveland and Cleveland Heights began meeting to discuss ways to improve the neighborhood, which is close to the popular Coventry Village area yet suffers from disinvestment and vacant buildings.

“We viewed it as a target area with a lot of good real estate fundamentals, yet a lot of blight,” Frangos said. “With some surgery, we thought that it could be changed a bit.”

Thanks to some funds allocated from the Ohio attorney general’s Moving Ohio Forward program, the result of the national mortgage settlement that was reached in 2013, the cities of East Cleveland and Cleveland Heights will begin to see blight eliminated.

“The dynamics shift overnight,” Frangos said. Once lots are cleared, they will be used for green space or for parking for large apartment buildings, helping spur reinvestment. There are now 10 land banks in Northeast Ohio, and 17 throughout the state.

Creating carbon copies

Former Cuyahoga County Treasurer Jim Rokakis, the architect of the Cuyahoga Land Bank, is now heading up the Thriving Communities Institute under the banner of the Western Reserve Land Conservancy. He’s helping communities across the state — indeed, across the country — replicate the Cuyahoga Land Bank.

“People who think that they live “out there’ and are immune to the problem are sorely mistaken,” says Rokakis, arguing Northeast Ohio’s suburbs face higher taxes when Cleveland’s tax base declines. “It’s a big-city, small-city and medium-city problem.”

The Lake County Land Bank, which was formed last year, recently acquired Moving Ohio Forward funding to demolish 80 homes. Executive director John Rogers has applied for nonprofit status so that the agency can accept donated properties or purchase HUD foreclosures at a discount and rehabilitate them for future sale.

“It’s an excellent tool,” he says. “It certainly meets a need, and it is one avenue for helping stabilize neighborhoods and their value and spur future economic growth.

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More federal dollars coming to demolish vacant and abandoned properties across Ohio (WEWS)

WASHINGTON, D.C. – U.S. Senator Sherrod Brown (D-OH) has announced that $10,118,750 in Hardest Hit Funds (HHF) have been awarded to Cuyahoga County to demolish vacant and abandoned properties.

In August 2013, the U.S. Department of the Treasury approved a request to use $60 million of the state’s nearly $375 million remaining HHF to demolish vacant and abandoned properties.

Part of the Neighborhood Initiative Program (NIP), these funds represent a portion of the $570 million in Ohio HHF that Brown helped secure as a member of the Senate Committee on Banking, Housing, and Urban Affairs back in 2010.

The money is available to Ohio counties with established land banks.The Cuyahoga County Land Reutilization Corporation is one of 11 land banks receiving first round funds through the program.

Others receiving money in the state include:

  • City of Canton: $4,235,000
  • Central Ohio Community Improvement Corporation: $5,825,000
  • Cuyahoga County Land Reutilization Corporation: $10,118,750
  • Lucas County Land Reutilization Corporation: $6,000,000
  • Lorain County Port Authority: $3,005,000
  • Mahoning County Land Reutilization Corporation: $4,266,250
  • Montgomery County Land Reutilization Corporation: $5,055,000
  • The Port of Greater Cincinnati Development Authority: $5,065,000
  • Richland County Land Reutilization Corporation: $773,750
  • Summit County Land Reutilization Corporation: $2,000,000
  • Trumbull County Land Reutilization Corporation: $3,221,250

In a press release, Senator Brown said, “These demolition funds are a critical step forward in rebuilding Northeast Ohio neighborhoods devastated by the housing crisis. Our local communities need more resources to address the scourge of blighted properties that undermine surrounding property values, drain local resources, and threaten the safety and security of our neighborhoods. The Neighborhood Initiative Program will go a long way towards meeting that need and stabilizing local neighborhoods.

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Mission Complete: Purple Heart Homes will hold ceremony for local veteran who got a refurbished home (WEWS)

SOUTH EUCLID, Ohio – Purple Heart homes will hold a Mission Complete Ceremony to welcome U.S. Army veteran Demond Taylor and his wife Amber to their new renovated home on Avondale Road in South Euclid on March 1 at St. John’s Church gymnasium.

South Euclid’s Mayor Georgene Welo will serve as Mistress of Ceremonies and the keynote speaker will be Major General Charles Swannack, Jr.(retired).

Purple Heart Homes purchased the vacant home on Avondale Road from the Cuyahoga County Land Bank for $1 and completely gutted it. They constructed a new addition, a garage and completely renovated the home. Volunteer union labor from all local building trades worked on weekends and evenings along with city councilman, neighbors and the Geauga County Habitat for Humanity to complete the home. Petitti’s Garden Center provided plants for the landscaping.  Purple Heart Homes contributed approximately $50,000 for the renovations,

Taylor and his wife Amber will be paying a mortgage of 50 percent of the current home market value.  At the end of 15 years Taylor will own the home free and clear.

Demond Taylor is a graduate of Heidelberg College where he majored in history.  His dream was to make the military his career.  Taylor was 27 when he deployed to Iraq.  He was involved in several explosions that resulted in Traumatic Brain Injury (TBI) and Post Traumatic Stress (PTS). He currently works for the VA and is going on for his masters degree.

The home in South Euclid for Taylor is the first Purple Heart Homes project in Ohio.  At the March 1 ceremony, the community will be introduced to USMC Leo Robinson, who will receive the second South Euclid Home also purchased from the Cuyahoga County Land Bank for $1.  Renovations on that home will begin in the spring.

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Cuyahoga County to receive $10.1 million in latest round of federal demolition funding (Plain Dealer)

CLEVELAND, Ohio – Cuyahoga County will receive the largest portion of $49.5 million in federal money going to Ohio counties for the demolition of vacant or blighted homes.

The Cuyahoga County Land Bank will receive $10.1 million of the state’s latest share of “Hardest Hit Funds” – a program that falls under the umbrella of 2008’s federal Trouble Assets Relief Program — the Ohio Housing Finance Authority announced on Friday.

Land banks in 10 other counties also received a cut of the money.

Numerous factors guided the distributions, including county population and the magnitude of vacant and blighted properties owned by land banks or targeted for acquisition. The money can offer up to $25,000 for each demolition, but the average per-demolition assistance is expected to be $12,000.

Cuyahoga County is estimated to have between 10,000 and 15,000 blighted properties, according to a recent study from the Western Reserve Land Conservancy.

Two other nearby counties will also receive demolition funding – Lorain County will get $3 million, and Summit County will get $2 million, according to the Ohio Housing Finance Authority, the state agency that distributes the funds in Ohio.

The remaining $34.5 million will be split among Lucas County ($6 million), Franklin County ($5.8 million) Hamilton County ($5 million) Montgomery County ($5 million) and Mahoning County ($4.2 million), among others.

“The Neighborhood Initiative Program will provide much-needed relief to Ohio counties with a large number of vacant and dilapidated homes,” said Ohio Housing Finance Agency Executive Director Doug Garver in a written statement. “This program will not only alleviate the burden of blighted neighborhoods on families, communities and Ohio’s economy; it will also help to keep individuals in their homes.”

The state will distribute a second round of federal demolition funding later this year. And, Cuyahoga County Executive Ed FitzGerald announced earlier this monththat he is taking steps to borrow up to $50 million to fund demolitions within the county.

However, FitzGerald has not yet shared the details of his program.

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Fun Fact! Side Lot Program

The Cuyahoga Land Bank currently has 665 vacant lots in its inventory. And just this week we received great press coverage by The Plain Dealer on our Side Lot Program! We want to see vacant lots bloom as community gardens, urban farms, pocket parks and orchards. For more information about our Side Lot Program, please contact Lilah Zautner, Manager of Special Projects and Land Reuse at 216-698-4696, or at lzautner@
cuyahogalandbank.com

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Purchase and Renovation Programs at the Cuyahoga Land Bank | Judge Burt Griffin visits Cuyahoga Land Bank – Cuyahoga Land Bank News – 2014.2.2

Posted in 2014.2.2, Newsletter

Did You Know? Purchase and Renovation Programs at the Cuyahoga Land Bank

In the sixth installment of our FAQ video series, we explore programs available for the purchase and renovation of a Cuyahoga Land Bank home.  The most popular program is the Deed-in-Escrow Program. An interested buyer is provided with a renovation specification. If a buyer can demonstrate the financial capability to acquire and renovate the property, then the Cuyahoga Land Bank will consider the offer.  The buyer has approximately four months to complete the renovation after their offer has been accepted.  Once the renovation is complete, the Cuyahoga Land Bank inspects it.  A property that passes inspection has its deed transferred to the buyer.  Sometimes the Cuyahoga Land Bank will renovate a property in-house and place it on the market.  In an effort to increase home ownership, the Cuyahoga Land Bank created the Owner Occupant Buyer Advantage program that sets aside properties with $15,000 or less in estimated repairs for owner-occupant buyers for 30 days.

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Posted in 2014.2.2, About Us, Land Bank FAQ, Newsletter, Videos

Land bank invites garden clubs to turn empty lots into green space (The Plain Dealer)

The Cuyahoga Land Bank wants to see vacant lots bloom as community gardens, urban farms, pocket parks or orchards.

The land bank’s side yard program encourages homeowners who live next to an empty lot, or garden clubs, to apply to buy or lease land, said Lilah Zautner, manager of  special projects and land reuse with the Cuyahoga Land Bank. The land bank works to acquire dilapidated homes and prepare them for rehabilitation, sale, demolition or reuse as gardens or green space.

The side yard program has been around for two years, but Zautner is reaching out to garden clubs to publicize the opportunity to start new gardens. “We’ve gotten a lot of interest,” she said. “We hope to see (lots) turned into more than just grass.”

Most city lots in Cleveland are about 4,000 square feet. When homes are demolished, the debris is taken away and a layer of top soil is laid down, although the usual soil amendments will be needed for growing vegetables. “It’s prepped for whatever use comes after,” she said.

Gardening groups can ask the land bank to transfer an empty plot to the city where the lot is located so that the group can lease it through their home city, Zautner said. This allows suburbs to have a say in what happens to the lots.

Leases usually cost from $1 to $100 a year and last for one year or five years. This approach allows block clubs or garden clubs to try out a community garden without taking on the responsibilities of land ownership, such as taxes, she said.

Water hook-ups are removed when homes are demolished. In Cleveland, garden groups can hire a plumber to have a water line and meter installed, but that can cost $1,500 and up, she said.

A cheaper way to go is to get a city water permit to use a nearby fire hydrant. In the city of Cleveland, approved gardens can buy a water permit for the growing season for about $100 for a garden of less than two acres, and $150 for a larger plot.

Zautner encourages gardeners and community groups who want to use these lots to contact her so that she can determine the best way to proceed. She can let garden leaders know which lots are still in the land bank’s inventory, and the location of buildings slated to be razed soon. The land bank currently is managing more than 600 lots.

Contact Zautner at 216-698-4696, or at lzautner@cuyahogalandbank.com.

Read the original article in The Plain Dealer here.

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Posted in Land Bank Coverage

Bringing Back the Neighborhood: How land banks can stabilize blighted urban areas in ways that the speculative real-estate market cannot (Metroland)

In 2010, the Beach Street corridor of Flint, Mich., was pockmarked with 16 trash-filled vacant lots. A year later, this two-acre area a mile south of downtown Flint had been consolidated into Flint River Farm, the city’s largest urban farm, replete with a passive solar hoop house for year-round growing, in what had previously been a blighted stretch of food desert. The two women who farm this land own three of the lots and lease the others from the Genesee County Land Bank.

Neighbors have welcomed the endeavor—for its beauty, for the valuable food choices it offers the community, for the job prospects it has created, and for lending hope to residents who are toughing it out in one of the nation’s most famous Rust Belt cities.

 

photo by Ann Morrow

 

In the decade since Genesee County first took steps to create its nonprofit land bank, a growing number of municipalities, counties, and states have begun to embrace land banks as a tool to systematically address vacant and abandoned properties. A land bank is an entity, public or nonprofit, with the authority to acquire vacant or distressed property, clear title and taxes, and assemble it, redeploy it, or maintain it in strategic ways, rather than based on the short-term highest bid.

Land banks offer public agencies a number of robust options to undercut dynamics in the real-estate market that often foment, rather than avert, urban blight. Properties that are too deteriorated, low-value, or constrained by title problems to be feasibly preserved or rehabbed either by the market, partnerships, or even subsidized nonprofit programs, can often be turned into assets, or at least less actively negative influences, by the intervention of a land bank.

Interrupting Speculation

Typically, abandoned properties are forced upon the open market through tax foreclosure sales, where speculators concerned with quick profits rather than long-term community viability flip them or simply let them lie fallow. Local authorities have little say in how these properties are repurposed, leaving significant percentages unoccupied, unused, and forgotten. County treasurers are typically legally compelled to put these properties’ tax liens up for sale. Where clear title to abandoned properties does not exist—often the case with tax-sale properties—public officials find their hands tied when trying to move properties back into productive use. And yet, taxpayers and their public agencies continue to shoulder the financial and social costs of these blighted properties—crime, deterioration, falling property values, and a foundering tax base.

Land banks change this dynamic. They have the legal authority to efficiently acquire, hold, manage, and develop tax-foreclosed property. They can clear liens and title problems. They can systematically assemble multiple lots and properties for productive reuse, where before a developer might have struggled to stitch together multiple parcels of land to construct senior housing or commercial space, or local governments may have strained to assemble multiple lots for a new school or parkland. They can sell properties on the open market, or to targeted purchasers such as adjacent homeowners or nonprofits. They can hold other properties off the market until the time is right, renting them out, or demolishing structures and greening lots to reduce harmful effects in the meantime.

With these powers, land banks give local governments the capacity to have some say in the path that development and reuse takes and think about redevelopment efforts beyond a single property, at the level of a block, a neighborhood, and a region.

Above all else, public land banks democratize development decisions, giving local residents and the business community the capacity to have a say in ensuring that blighted property is not just identified and regulated, but responsibly remediated to the greater good of the community. Where before, neighborhoods struggled with the consequences of neglected properties, land banks allow cities and counties to take responsibility not just for the economic consequences of blighted land, but for the process of ensuring that this land is put in the hands of those committed to responsibly redeveloping that property.

All land banks are not created equal, however. Successful land bank programs rely on four critical elements:

• a connection to the tax foreclosure process in the community as an alternative to the auction process;

• formation around the largest, most diverse market possible, typically at the county or regional level;

• decisions that result in transparent, accessible documentation; and

• a commitment to be engaged with the community and to encourage ongoing interaction with residents.

The Flint Model

Flint pioneered the modern version of the public land bank in 2002. Within a few years, land bank intervention caused surrounding property values to be restored by more than $100 million, according to a study by Nigel Griswold and Patricia Norris of the MSU Land Policy Institute.

As a first step in formally launching the Genesee County Land Bank, elected officials first had to introduce legislation that reformed the state’s obsolete foreclosure system, establishing a direct connection between foreclosed properties and the land bank, which became the primary mechanism for managing and repurposing thousands of properties.

Then, the land bank and county government created a self-financing mechanism, in which the county treasurer’s office issues short-term bonds to fund unpaid taxes, then collects the taxes to repay the bonds, effectively acting as a benevolent tax lien purchaser. That critical step ensured that vacant, abandoned properties no longer posed an investment opportunity for speculative investors, and the county was able to earn a return on its investment that could be distributed back into rebuilding its tax base.

Genesee County understood that development cannot necessarily be simply left to its own devices, particularly when a city and a region are confronting systemic dynamics like deindustrialization. In practical terms in Flint, that has meant using the land bank as a mechanism to demolish more than 1,200 blighted properties and sell thousands of others–returning millions of dollars to the property rolls. It gave Flint the power to create hundreds of units of affordable housing through sales and rentals to carefully selected buyers. While challenges still abound, the data clearly show that the land bank has played a critical role in helping to stabilize neighborhoods, deter blight, and give local residents not just hope but real practical solutions.

Embracing the Model

The Genesee County Land Bank has become a model for other programs in Michigan and across the country. Today, 37 land banks operate in Michigan–just under half of the land banks in the United States. Pennsylvania, Michigan, Missouri, Ohio, Kentucky and Georgia all have specific legislation authorizing public land banks, and about a dozen other states have development authority statutes or similar mechanisms in place that can function to some degree as land banks.

One exciting example is the Cuyahoga County Land Bank, covering the Cleveland metro area, which has been in place since 2009. In the last two years, the land bank has acquired more than 1,200 abandoned properties and crafted groundbreaking partnerships with HUD, Fannie Mae, and leading banks to take vacant land out of the downward spiral of speculation, blight and disinvestment by having low-value, obsolete properties not remain on the market or in REO status, but transferred to the land bank, with a donation to cover demolition costs. Those relationships have begun to have a profound effect in slowing the volume of what the land bank describes as “speculative trafficking in low-value, abandoned properties in Cuyahoga County.”

Cuyahoga County modeled its land bank on Genesee County’s innovations, integrating sweeping reforms in the tax foreclosure process within a leverageable funding stream. The land bank funds its operations each year with roughly $6 to $7 million dollars it collects in penalties and fees from delinquent property tax bills—dollars that previously would have gone into the coffers of tax-sale speculators.

In Kalamazoo, Mich., local officials have used their county land bank (created in 2009) for blight removal and corridor redevelopment, to foster new construction of commercial areas, to support community garden and beautification programs, and to assemble and reposition property across the city. Land banks aren’t limited to acquiring tax foreclosures. The Kalamazoo County Land Bank also has entered into purchase agreements on bank-foreclosed properties near other targeted investments, allowing the city to craft a block-by-block approach that maximizes the strategic impact of its redevelopment efforts.

The Community Role

For land banks to maximize their positive impact, it is critical for them to earn the trust of residents in distressed communities, who are often suspicious of government’s role in managing blight or being involved in real estate at all. Land bank authorities can earn the trust of community members and increase the level of community participation in the redevelopment process by providing responsible oversight and a commitment to transparency.

Residents of local communities and the business endeavors that employ them share a commitment to the long-term viability of their neighborhoods and the larger region. When these core constituencies—residents, the local business community, nonprofit partners and engaged developers—come to see land banks as partners in responsible, comprehensive redevelopment goals, land banks can bring real scale and long-term benefits to distressed neighborhoods and communities seeking a path forward to long-term economic and social well-being.

Read it from the source.

 

Posted in Uncategorized

Cleveland City Council study confirms what neighbors say they already knew

CLEVELAND – A study released to Cleveland City Council on Tuesday finds that demolition leads to reduced foreclosures, stabilizes real estate values and lessens tax delinquencies.

Cleveland needs $83 million to demolish another 8,300 houses identified as distressed properties. Since 2006 the city has demolished thousands of abandoned houses.

Several of those homes have been on Morton Avenue, in the Broadway Union neighborhood of Cleveland.

Neighbors said getting rid of the abandoned houses has made their neighborhood a better place to live. “The less vacant houses around here the safer, ” said Ken Shefton.

Shefton feels passionately about tearing down the empty houses because the blight has touched him personally. His sister was murdered.

“She was killed in an empty house and drug out to a field,” said Shefton.

On East 72nd Street, there is more vacant property than houses. But there is also a sign of things to come.

Addresses on pieces of wood where abandoned houses once stood and new homes will be built are popping up.

Just one street over, on East 71st Street, new homes are up and ready to be sold. “Good is happening,” said Gus Frangos with the Cuyahoga County Land Bank. The Land Bank Frangos said has rehabbed close to 800 homes since it opened its doors in 2009.

The study released to council Tuesday also recommended state and county bonds to meet the funding need for demolitions.

Read it from the source.

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Posted in Land Bank Coverage

Did You Know?: HomeFront Veterans Homeownership Program

The Cuyahoga Land Bank has launched the HomeFront Veterans Homeownership Program (‘Homefront’), offering assistance to eligible veterans interested in purchasing either a renovated move-in ready home or a home that will be renovated with the assistance of the Cuyahoga Land Bank.
Veterans may be eligible for a discount of up to twenty percent (20%) of the purchase price. The Cuyahoga Land Bank also covers closing costs.
All properties in the Cuyahoga Land Bank inventory are available to veterans via the HomeFront Program.
For more information about the program, please visit our website
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Posted in 2014.2.1, Didja Know?, Newsletter

Study: Northeast Ohio Houses Bought by Out-of-State Investors More Likely to End up Vacant (WCPN)

A housing study commissioned by Harvard University and conducted by local researchers found that foreclosed houses in Northeast Ohio bought by large out-of-state investors saw a high rate of failure. Ideastream’s Nick Castele reports.

The study found that houses bought by big outside investors over the past dozen years were more likely than those bought by local investors or community development groups to end up in tax delinquency, condemned or abandoned.

Frank Ford, one of the study’s authors, is a senior policy advisor with the Western Reserve Land Conservancy’s Thriving Communities Institute. He says some investors admitted in interviews that they bought houses sometimes without even knowing what condition they were in.

“Some of these companies put these properties on eBay, and basically if they could just generate a few hundred dollars from each transaction, and if they do 100 of those transactions, that’s actually profitable,” Ford said. “It’s not good for our Cleveland neighborhoods.”

The study also found a large portion of the houses that wound up abandoned or condemned were in largely African-American neighborhoods in Cleveland.

Ford says many have long suspected these things about the housing crisis, but now he’s got numbers to back it up.

Listen to the interview.

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Posted in Relevant News

Heritage Home Loan Program

On a Thursday afternoon in mid-January, Cuyahoga Land Bank President Gus Frangos braved the bitter cold in a show of support to participate in a press conference announcing the launch of the Heritage Home Program in South Euclid.
“The Land Bank has worked with every one of the partners that has come together to make this program possible – the City of South Euclid, First Federal of Lakewood, Cuyahoga County and the Cleveland Restoration Society,” Frangos said.  “We are happy to be able to support and promote such a great program.”gus_speaking
Program partners and supporters gathered in front of 4084 Bluestone Road – one of the historic homes eligible for the program – to announce the launch of the Heritage Home Program in South Euclid.
“Houses like this, we believe in,” said Cleveland Restoration Society Executive Director Kathleen Crowther of 4084 Bluestone Road. “ It’s a charming home and a charming neighborhood.”
Heritage Home combines free technical assistance from the Cleveland Restoration Society for homes that are 50 years and older with First Federal of Lakewood’s Heritage Home Loan, which offers loan rates that are more affordable than ever before.
“This program is a game changer,” said South Euclid Mayor Georgine Welo. “Heritage Home will help us fill an existing gap in the market which has prevented interested and credit-worthy homebuyers from purchasing and undertaking a renovation, not just in South Euclid, but across the County.”house
Program participants will receive an interest rate as low as 1.4% on their renovation loan along with construction advice and project guidance.
The program allows current home owners to undertake repairs they could not previously tackle and opens the door to investment by potential new owners in vacant historic homes.
More information on the Heritage Home Program is available at www.heritagehomeprogram.org.  Watch highlights from the press conference in South Euclid.

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Posted in 2014.2.1, Newsletter

Philadelphia Achieves Land Bank Through Compromise (Shelterforce)

Philadelphia is about to become the largest city in the country with a land bank.

A land bank is a nonprofit or government agency whose sole function is to efficiently maintain, clear title to, assemble, and market vacant property in order to transfer it to responsible new owners for productive reuse. On December 12, 2013, after many years of organizing, negotiating, and compromising, the Philadelphia City Council finally passed an ordinance establishing one for the city. Mayor Michael Nutter signed the law on January 11, 2014, calling it “the start of a new era in Philadelphia.” City Council President Darrell Clarke told the large crowd of advocates at the signing ceremony, “I hear you. The city will get properties back online.”

Philadelphia certainly needed a more effective way to return vacant properties to productive use. The city has approximately 40,000 vacant properties. Of those, roughly 10,000 are publicly owned, by four different public agencies: Redevelopment Authority of the City of Philadelphia (RDA), the City of Philadelphia Department of Public Property, Philadelphia Housing Development Corporation and Philadelphia Housing Authority. (The housing authoriy has not yet agreed to transfer its land to the land bank.) The properties are located in virtually every neighborhood of the city, but concentrated in low-income neighborhoods in North and West Philadelphia. Approximately 17,000 of the privately owned vacant parcels are tax delinquent, most by over a decade. These tax delinquent properties owed a total of $70 million to the city and school district in back property taxes as of 2010.

Only 1 to 2 percent of the publicly owned properties are transferred each year. At that rate meaning it would take Philadelphia 100 years trajectory to return publicly owned vacant properties to market, even without any new vacancies.

One of the problems is, in Philadelphia, as in most cities, no single entity is responsible for acquiring, assembling, and disposing of vacant parcels, or for thinking about the entire inventory of parcels and making strategic land use decisions. Under the existing process detailed in this flow chart, the transfer of a single publicly owned vacant property takes from 1.5 to 3.5 years, even when there is no significant opposition. An interested buyer must complete one of four arduous processes involving more than a dozen different agencies and approving bodies to acquire publicly owned land. Many potential buyers make a substantial investment of time trying and never succeed in acquiring the property they seek.

The land bank offers the city the chance to do it better. When fully up and running, it will:
1. Create one owner of publicly held vacant land;
2. Produce and make available an accurate, online inventory of vacant land;
3. Ensure all 10,000 publicly owned vacant properties have clean and clear title;
4. Define a single, written vacant property transfer process;
5. Reduce the average time for property transfer by over one year;
6. Require the land bank to weigh community benefit, and not just price, when deciding between potential buyers;
7. Mandate a more equitable, accountable and transparent disposition process with extensive reporting to the public;
8. Strategically acquire tax-delinquent properties, rather than requiring their sale to the highest bidder at tax sale auction;
9. Appoint community representatives to the board;
10. Acquire and dispose of property in a manner that complies with the city’s comprehensive plan and land bank strategic plan.

The Organizing
An alliance of unusual suspects worked together to convince the city to create the land bank. Statewide groups Housing Alliance of Pennsylvania andRegional Housing Legal Services and citywide group, Philadelphia Association of Community Development Corporations (PACDC), used a grant from the William Penn Foundation, to start the work. The Oak Foundation also offered grants to PACDC and to one of its members, the Women’s Community Revitalization Project (WCRP), to focus on pushing for an equitable land bank and for WCRP to establish community land trusts(different from land banks) in the city that would keep land affordable in perpetuity as market prices rose, and could be disposition options for land bank property that would turn it toward community benefit.

The Housing Alliance of Pennsylvania led the charge for state enabling legislation to authorize the creation of land banks in the first place. State enabling legislation signed into law by Governor Corbett in December 2013 not only allowed land banks, but created huge incentives for Philadelphia to create one: it gave tax sale bodies the option to transfer tax foreclosed properties to a land bank, rather than selling the properties to the highest bidder at tax sale auction. This new power has the potential to stop a common cycle in Philadelphia of transferring properties from one irresponsible owner to another at tax sale without the ability to ensure that the new owner possesses the capacity, resources, and commitment to reactivate the land.

The Philadelphia Association of Community Development Corporations (PACDC) led the campaign to advocate for a land bank within the city with a three-pronged approach. First PACDC commissioned a report, in partnership with the city’s redevelopment authority, to articulate the costs to the city of having a broken vacant property process. The report, titled Vacant Land Management in Philadelphia: The Costs of the Current System and the Benefits of Reform by Econsult Corporation, May 8 Consulting, and Penn Institute for Urban Research, found that the city spends $21 million a year just to address unsafe conditions and maintain vacant properties at the most basic level. Loss of tax revenue to the city and school district, and loss of property value wealth extends to the billions.

Second, PACDC created the Philly Land Bank Alliance, an alliance of citywide groups representing small business, private market and nonprofit developers, environmental groups, and neighborhood groups who wanted to fix the city’s broken vacant property process. Bringing together public interest lawyers, for-profit developers and realtors, urban farmers, grassroots neighborhood civic organizations, architects, small business owners, and anti-blight organizations to advocate for a single reform was unprecedented, and keeping these groups united around a single message throughout the campaign was extraordinary.

The Philly Land Bank Alliance’s message was it wanted a vacant property system that had: one owner, one inventory, one process, one standard of maintenance, and one standard for enforcement. The group also fought for a land bank that was predictable, efficient, transparent, accountable and equitable.

WCRP also had created a strong grassroots coalition of neighborhood groups called the Campaign to Take Back Vacant Land. The Campagin also joined the Alliance and its steadfast focus on equity and community benefit was adopted by the larger Alliance as it negotiated the ordinance with the city council. As a result, the Philadelphia land bank has unpredecented community accountability measures built into the law: 4 out of 11 land bank board members will be community representatives, detailed reporting to the public is required, and future uses for vacant land must comply with comprehensive and approved neighborhood plans.

The alliance reached out to the mayor and brought him on board. Creating a single agency to focus solely on the city’s vacant land made sense to the administration, with the one caveat that the city did not want to create new bureaucracy or hire new staff.

It was also critical for there to be a city council champion to draft legislation and push hard for its passage. Councilwoman Maria Quiñones-Sánchez , whose district has thousands of vacant properties that are harming her constituents, stepped forward. She had worked since her election in 2008 to get this land into the hands of responsible owners and to reactivate these properties, but with limited success due to the complex and time-consuming nature of the four processes to acquire vacant property from the city. Councilwoman Sánchez sees the land bank as a “game changer” that will stop government from “standing in the way of Philadelphians who seek to build a business, home or community garden” on vacant land.

Compromise
With the need and the constituency and popular support established, PACDC’s third step was figuring out what it would take to create a land bank ordinance that both city council and the mayor (and the Alliance) could support. Not surprisingly, the law represents a political compromise.

Several members of council were not willing to hand over the power to approve property transfers to the new land bank. The president of the city council argued that council needed to retain its historic power to stop a property transfer, called councilmanic prerogative, because if something bad happened on a vacant lot or more than one constituent wanted to buy it, the district councilperson would be blamed. In addition, at the end of the process, a city council resolution is required to approve each transfer and the council retained a 14-member Vacant Property Review Committee established in 1977 to evaluate vacant property transfers under one of the city’s four vacant property transfer processes.

As a result, in addition to the land bank staff and board’s evaluation, every transfer must still be approved by three bodies: the land bank, the VPRC, and council. In return, council added greater transparency and accountability to the process and requirements for the land bank staff to regularly report to the public on their progress in achieving the goals of a strategic plan and annual performance goals. The public will be able to see how long it takes to approve an offer for land and where in the process approvals are being held up or denied.

Some Alliance members questioned whether they could support a land bank where three approvals are required for every transfer, but the majority of the allies viewed this ordinance as a first step toward unified ownership and a single predictable process for publicly owned vacant property transfer. In the end, the allies and the administration agreed that the land bank law represented the best chance to improve the system.

Getting to Work
The new land bank will significantly improve the city’s vacant property process. The city will be able to offer public properties with clean and clear title through a single written process within a timeframe of 1 to 1.5 years. The bill also elevates community benefit over obtaining the highest price for a parcel for the first time and requires a detailed strategic plan for bringing properties back online.

But now, the hard work begins. Philadelphia must clean title to almost 10,000 properties and transfer them into land bank ownership from existing public agencies. Then, Philadelphia must staff the land bank, appoint a permanent board, allocate funding, and write effective policies and regulations. Watch with us as we monitor and report on the land bank’s performance as Philadelphia enters “a new era” and brings its vacant land back into productive reuse.

Read it from the source.

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Posted in Relevant News

Home Ownership Workshop a Great Success!

Freezing temperatures did not discourage over 30 interested homebuyers, primarily military veterans, who attended the Cuyahoga Land Bank’s free Homebuyer’s Workshop on Saturday January 18th.  The event highlighted the Land Bank’s new HomeFront Veteran Homeownership Program (‘HomeFront’) and provided a wealth of information on the home buying process.veterans_workshop
The workshop was held in partnership with Howard Hanna Real Estate and Mortgage Services at Howard Hanna downtown Cleveland offices located at 800 W. St. Clair Avenue.  Cuyahoga Land Bank staff Dennis Roberts and Vatreisha Nyemba excellently presented information about the Land Bank and the HomeFront program, informing and enlightening workshop participants about the numerous functions and community impacts of the Land Bank.  Workshop participants were also able to receive answers to questions and converse with Land Bank staff.
Additionally, Howard Hanna Finance Managers Angela Spicer and Mike Pusateri took workshop participants step-by-step through the process of purchasing a home; from securing financing to the final close.   Information about the various programs Howard Hanna has for Graduates, Renters and First Time Buyers was also shareddennis_presents.
At the close of the event, workshop participants expressed appreciation for the wealth of information provided.  Many are looking forward to working with the Cuyahoga Land Bank and Howard Hanna as part of the HomeFront program. Gus Frangos, President and General Counsel of the Cuyahoga Land Bank said, “Offering the HomeFront program for veterans in conjunction with the Howard Hanna Mortgage Services programs provides a great avenue through which our mission and the Howard Hanna Real Estate mission will be further realized.” Based on the interest expressed during this event, discussions are underway to make the event a quarterly offering.
For more information about the HomeFront Veteran Homeownership Program, contact the Cuyahoga Land Bank at 216-698-8853 or visit our website.

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Posted in 2014.2.1, Newsletter

Homeownership Workshop A Great Success! | Heritage Home Loan Program – Cuyahoga Land Bank News – 2014.2.1