Cuyahoga County land bank marks first year with series of accomplishments

Media Reports News

Cuyahoga County land bank marks first year with series of accomplishments

July 4, 2010 [Sandra Livingston, The Plain Dealer]

CLEVELAND, Ohio – A California company was in Cleveland Housing Court and facing $500,000 in fines unless it did something responsible with its sizable portfolio of derelict properties.

The city of Garfield Heights wanted to raze a shuttered and dilapidated theater that hadn’t seen a movie in decades, but couldn’t cut a deal with more than a dozen scattered owners to relinquish the property.

And Metro Catholic School in Cleveland was eager to see the foreclosed and vacant house next to one of its buildings razed and replaced with garden, fitness and green space — but its expertise wasn’t in demolitions.

In each case the Cuyahoga County land bank is playing a unique role that it was created to fill — taking in blighted properties to wipe the land clean for a fresh start.

“The land bank is a great asset,” said Sister Carol Brandt, Metro Catholic’s director of advancement. “They’re able to facilitate the taking back of these foreclosed properties that are abandoned and helping us recreate our neighborhoods.”

Launched a year ago and formally known as the Cuyahoga County Land Reutilization Corp., the land bank is the first of its kind in Ohio, a quasi-governmental nonprofit that is like a real estate corporation with a public mission.

Its aim is to strategically acquire foreclosed, vacant or abandoned residential or commercial properties and see them rehabilitated when possible or demolished where necessary — with the aim to reduce blight, increase property values and improve the quality of life.

In a region rife with foreclosures and vacant property it can’t take everything. But the land bank has produced accomplishments that are seen on the ground.

It’s also spent a good part of the year developing critical, but not flashy, systems vital to the workings of a start-up enterprise plowing new territory.

“You can’t just open up your doors one day and say I want to take 50 properties,” said Gus Frangos, president of the land bank. “The effectiveness a year out, two years out will be the systems that we put in place now.”

The land bank has acquired more than 200 properties and Frangos expects the number will top 700 by year’s end.

The biggest pipeline has been with Fannie Mae, which under a groundbreaking agreement is selling low-value foreclosed homes to the land bank for $1 — and contributing $3,500 toward demolition for each one that can’t be saved.

And last week it reached another landmark agreement — this one with the U.S. Department of Housing and Urban Development — for a countywide program to take some of the worst of HUD’s foreclosed properties for as little as $100 each.

The land bank also scored a win earlier this year when it took the lead on a proposal that snagged nearly $41 million in federal neighborhood stabilization dollars mostly to demolish dilapidated homes and renovate others. Its grant partners are the county, the city of Cleveland and the Cuyahoga Metropolitan Housing Authority.

And then there are the accomplishments sometimes measured property by property.

In Garfield Heights, where the city was stuck with a closed theater that had became a structurally unsound, graffiti-riddled nuisance, the land bank secured a deal with owners to take title at no cost.

It will wipe out the back taxes, demolish the structure, and then transfer the land to Garfield Heights for an economic development plan the city already created.

“They’re saving us,” said Noreen Kuban, the city’s economic development director

And on Cleveland’s Near West Side, the land bank bought the house next to Metro Catholic for $2,500 and will demolish the place, with the Cleveland Catholic Diocese and the school providing up to $7,500 for demolition.

The Detroit Shoreway Community Development Organization came up with the idea when it learned that the house — which it believed should be demolished — could otherwise be sold to a buyer unable or unwilling to make repairs.

Then there’s Thor Real Estate LLC of California, which was facing stiff fines from Cleveland Housing Judge Raymond Pianka for failing to resolve housing code violations.

The judge was willing to consider reducing the penalties if Thor did such things as fixing derelict conditions, demolishing houses that couldn’t be repaired, or transferring properties to responsible owners.

Thor contacted the land bank and ultimately handed over 24 properties — some vacant lots, others with houses that needed to be demolished. The land bank got Thor to agree to pay half the demolition costs. And its taxes were wiped off the books — something that Frangos said would have happened anyway if the property had gone through tax foreclosure.

As the land bank launches Year Two, it’s got an ambitious list of things to do in addition to more property acquisitions.

It aims to raise about $15 million in bond financing later this summer. Its 2010 budget — which comes from several other sources as well including federal grants, penalties and interest on unpaid real estate taxes, and dollars paid by former property owners to help pay for demolition — is about $21.6 million. Because it’s a stand alone enterprise none of the land bank’s dollars come from the county’s general fund.

It has also started to share its know-how with other Ohio counties interested in creating their own land banks. They include Lucas, Franklin, Hamilton, Montgomery and Mahoning counties.

And now that it has a growing portfolio of properties, the land bank is testing programs to determine how best to renovate and sell homes.

It also has set aside $3 million for an economic development fund that could position it to pump dollars into promising ventures that bring jobs to the region. No projects are currently in mind.

“In two years I don’t want to be demolishing buildings as our sole visionary thing,” Frangos said. “The land bank has to be catalytic.”

And the land bank is talking again with Fannie Mae about forging another unique agreement. The two are looking to identify vacant properties earlier that are headed for or already in foreclosure, and then speed their transfer to the land bank so that they don’t sit vacant for months and at risk of being vandalized beyond repair.

If that plan works, Frangos wants to parlay it into more deals with others to combat the trend of so-called bank walkaways that result when lenders or mortgage companies don’t foreclosure on delinquent and derelict properties or don’t take them to sheriff sale, leaving them to sit in limbo.

The way County Treasurer Jim Rokakis — who chairs the board of the land bank and championed its creation in the state legislature — sees it, the housing crisis was years in the making and will take years to resolve.

“I think the land bank is going to become an incubator for a lot of ideas that really could make a difference in the lives of people in Northeast Ohio,” he said. “Lots of people have said this is one of the truly transformative initiatives to come out of this region in a long time.”