February 12, 2017 [Michelle Jarboe, The Plain Dealer]
CLEVELAND, Ohio – How much is a healthier housing market worth?
Cuyahoga County taxpayers have picked up the tab for at least 934 demolitions of empty, blighted houses and other abandoned buildings since mid-2015. With another 800-plus properties in the pipeline, the county has awarded $26.5 million of a $50 million fund created to shore up the shaky real estate market in Cleveland and its inner-ring suburbs, in particular.
Housing advocates say the program has been a salve, supplying much-needed funds to tackle a problem that has touched every community from East Cleveland to Rocky River. Home prices in Cuyahoga County still show broad disparities, with strikingly low values across a swath of the East Side. But clearing out the worst of the rot is giving communities a chance to heal.
That said, the county’s program isn’t without its critics.
Some housing advocates and public officials say the taxpayer cash would have a much bigger impact, especially in Cleveland, if spending was swifter and more concentrated. On the flip side, there’s a push in some nonprofit circles to devote more resources to renovation, filling a market gap for first-time and lower-income buyers in the city by reducing redevelopers’ costs.
“At this point in time, people in the community have come together and said ‘Let’s leave demo alone,'” said Ken Surratt, the county’s deputy director of housing and community development. “But if there’s a need for rehab, let’s figure it out.”
A new housing-market analysis from researcher Frank Ford is simultaneously heartening and sobering. It shows how far some suburbs and and city neighborhoods have come – and just how depressed other communities remain nearly a decade after the nation slid into a recession.
Median sale prices in Bay Village, Rocky River, Brecksville, Fairview Park and Lakewood hit new highs last year, Ford found. In Cleveland, prices rose not only due to gains in Ohio City, Tremont and Detroit Shoreway but also thanks to growth in East Side neighborhoods including Hough, Collinwood, Lee-Harvard and St. Clair-Superior.
But hundreds of homes still change hands for less than the price of a car.
After stripping out foreclosure auctions, deals between banks and transfers between relatives, Ford found that the median sale price in eastern Cleveland was $18,000 last year. Across the Cuyahoga River, the median sale price in West Side neighborhoods was $52,000.
In close-lying suburbs east of Cleveland, buyers paid a median price of $60,000 last year. The median price was twice that – $119,000 – across the western inner-ring suburbs, Ford determined based on data housed at Case Western Reserve University.
What do those imbalances have to do with demolition?
“There’s certainly a correlation between low values and a high concentration of blight,” Ford said. “On the East Side, there are something like 4,000 units that need demolition. There are maybe 600 on the West Side. That’s an extraordinary difference.”
Ford is a senior policy analyst for the Western Reserve Land Conservancy, a nonprofit group that has lobbied for more federal demolition funds and studied vacancy challenges in Cleveland, East Cleveland and other cities. It’s not shocking, then, that he believes that Cuyahoga County should hold steady, pouring the rest of its $50 million fund into demolition.
“We’re actually at a point in time where, if we stayed the course and didn’t divert the money to rehab, then in the next three or four years we have a chance to … give the housing market throughout the county a real boost here,” he said, noting that the flow of new blight, vacancies and foreclosures is slowing.
Between the county’s funds and federal money for land banks, he said, there’s barely enough cash to wipe out the estimated 7,000 or so vacant, distressed structures in the county.
Surratt, for his part, believes the actual number of demolition candidates is even lower. But he doesn’t dispute that Cleveland still has a capacious need for demolition funds.
“I think you’ll see less demand in the suburbs after this year,” Surratt said. “But the need in Cleveland, alone, could exhaust the rest of the funding in the program.
Scraped together from financing for projects that never happened, bond issues and the general fund, the county money is restricted to buildings that are both vacant and blighted – the worst of the worst, where renovations don’t make sense because of a house’s condition, the surrounding market, or both.
So far, Cleveland has won nearly $7 million through the program, which is application-based and offers awards in rounds. The city hopes to obtain another $4 million this year, to pair with a possible $1 million slug of community development block grant funding. But that money wouldn’t address even a quarter of the 2,200 properties the city is ready to demolish today.
“Our staff is experienced enough and our processes are streamlined enough that if we had a much larger pool of money available at once, there’s a lot of efficiency in being able to keep moving without having the stop-start, stop-start,” said Ron O’Leary, the city’s director of building and housing. “That is in no way a criticism of the county. We are thankful for the availability of funds. … There’s still a lot of work to be done, but we’re actually making good progress.”
The Cuyahoga Land Bank, which takes in properties in many communities, is the second-largest beneficiary of the county program, with $6 million. East Cleveland and Shaker Heights rank third and fourth, followed by Euclid, Garfield Heights and Maple Heights.
On Wednesday, the land bank demolished a long-vacant University Heights house that was a lodestone for neighborhood complaints. The county will reimburse the land bank once the site is cleared, cleaned and inspected. Funding recipients receive money only after the fact, with a cap of $100,000 per property.
The average cost of a residential demolition is $10,817, Surratt said, though one house in Cleveland cost almost $36,000 to raze. Commercial demolitions are pricier, at $33,864 on average, and can require cities to put up their own cash, partner with developers or seek other funding for the largest, most complicated jobs.
In its most recent application, Shaker Heights sought $440,000 to demolish 22 homes. The city also tapped the county program to tear down an old Masonic lodge, making way for a new childcare facility. And county demolition funds helped Shaker clear the old Quay Buick site at the Van Aken District, a public-private attempt to create a town center, of sorts, with shops, restaurants, offices and apartments.
“Because of cuts from the state, cities have been squeezed really hard in terms of funding,” said Kamla Lewis, the suburb’s director of neighborhood revitalization. “So the city would not have had the funding available for clearing these lots without county assistance.”
Rocky River recently tore down the four-building former Executive Club, which had been empty for years, to create a 1.9-acre development site. The county will cover most of the costs. Further afield, Glenwillow used the county program last year to knock down vacant buildings on Pettibone Road, where the village hopes to build a new, central service garage.
Both communities, with hale housing markets, don’t seem like immediate candidates for public demolition money from a program designed to attack real estate blight.
“Every community is dealing with that,” Lewis said of neglected properties, “whether it’s Pepper Pike or all the way down. It doesn’t know any boundaries at this point in time.”
Justin Fleming, director of real estate services for Cleveland Neighborhood Progress, is part of discussions about moving beyond demolition and into renovation – a tough shift in Cleveland, where city hall and neighborhood nonprofits have spent more than 10 years on triage.
“Now is not the time to divert any money that’s available for demolition,” O’Leary said. “That would really be penny wise and pound foolish.”
On some hard-hit streets, Fleming acknowledged, demolition might be the only logical choice. But there are other parts of the city where empty houses aren’t beyond redemption. Yet rehabbers won’t – or can’t – take on those houses if the costs exceed what a buyer will pay.
Fleming didn’t suggest cannibalizing county demolition funds for rehab, although that suggestion has been making the rounds. Instead, Cleveland Neighborhood Progress, Western Reserve Land Conservancy and other organizations are talking to politicians, lenders, land banks and philanthropic sources about strategies to support rehabilitation.
“Without question,” Fleming said, “I can’t imagine where we’d be without the county putting this bond together, without some of these federal … dollars. This city wouldn’t look anything like it does right now. … It was an absolutely needed investment. It still is, to some degree. There’s a question of how much, but there is no question that it has been a savior.”