Land Banks have proven to be effective fighters of blight

March 2, 2014 [Lee Chilcote, Crain’s 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.