Low-cost loft home conversions make old houses marketable, avoiding demolition

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Low-cost loft home conversions make old houses marketable, avoiding demolition

March 30, 2013 [Olivera Perkins, The Plain Dealer]

CLEVELAND, Ohio — Buying a house for $500 would be an indisputable bargain in most places, but not necessarily in Cleveland.

So when the owner of the vacant house in the St. Clair-Superior neighborhood made the offer to developer and landlord Charles Scaravelli, he paused.

A traditional rehab would cost at least $30,000, more than he could recoup by renting or selling the house.

That didn’t stop him. “Wow, it’s got a slate roof,” Scaravelli said. “I’ll buy it.”

Scaravelli’s decision, not knowing whether it would be an albatross or an opportunity, is turning out to be more than a risk that paid off for him. It also could affect the vast inventory of vacant and abandoned housing in the city and increasingly the suburbs.

Scaravelli converted the dwelling into a loft house, a rehab that cost only $10,000. He has had no problem renting the home on Schaefer Avenue for $500 a month and another on East 47th Street that he bought from the St. Clair Superior Development Corp. and converted.

Now the Cuyahoga land bank and the St. Clair Superior nonprofit are engaged in a pilot project to see whether the loft home conversions can be a way of bringing vacant houses, often the wreckage of the foreclosure crisis, back online. Demolition is the typical solution, but if an affordable model can be found to create a viable market for these houses, bulldozing doesn’t have to be their only fate.

Demolishing a house costs between $7,500 and $10,000, depending on the structure. The land bank is making a two-year, low-interest loan to Scaravelli, based on what it would have cost to demolish four houses he is scheduled to convert to loft homes. The development corporation is overseeing the project, in which the houses will be turned over to Scaravelli once completed.

“This will allow development to occur and also give us time to evaluate and debug the system,” said Gus Frangos, president and general counsel of the Cuyahoga County Land Reutilization Corp., the land bank’s official name.

He said the developer is receiving a loan, not a grant, because part of the appeal of the model is that it can be done with little or no public subsidy. Though the land bank will receive about $24 million for demolition from national foreclosure settlement funds and government matches, much demolition money comes from the public coffers.

There are about 26,000 vacant residential structures in Cuyahoga County, according to the land bank. Roughly 625 are in the land bank’s current monthly inventory; some of those will be demolished and others rehabbed. Frangos said the land bank has programs to sell off the inventory, often with incentives, to responsible homeowners and rehabbers.

“Part of the challenge is that, yes, we find rehabbers, we find homeowners; but there are not enough homeowners and rehabbers to match with every home that is distressed in the city of Cleveland,” he said.

The 1889 Victorian on East 47th Street sat empty for a few years before the owner gave it to the St. Clair Superior nonprofit, which sold it to Scaravelli for $1. The owner of the property, which had been in one family for decades, feared that if it had continued to sit, the structure would have deteriorated to a point of ending up in housing court.

Less than a decade earlier, in the midst of a hot housing market, the home probably would have sold easily. The St. Clair Superior group probably would have considered it an ideal candidate for rehab, putting $30,000 to $50,000 into the property, because it could sell for up to twice that much.

“Right now in the neighborhood, you couldn’t make that argument,” said Michael Fleming, the nonprofit’s executive director. “If you put in $50,000, it would still be worth $40,000.”

Fleming was speaking of a traditional rehab, in which most of the walls and floors of a house would remain intact and the structure would receive a new heating system, kitchen, bathrooms and more. Scaravelli based his alternative on knowing that many houses built in the late 1880s and early 1900s used balloon framing. That means that the studs in the load-bearing walls run uninterrupted from the foundation to the eave line. These two-story-high posts made of old-growth forest wood made it easy to tear out floors and walls, without causing structural damage, to dramatically alter the nearly 125-year-old house for an updated look.

Instead of a collection of mostly small rooms, often not much bigger than walk-in closets, the house now sports an open floor plan. Gone are the low ceilings. Most of the second floor has been removed. That story has been reworked into two semi-open spaces, facing each other, suitable for a bedroom, office or artist’s studio.

Much of the wood torn out of the house has been refashioned into such rustic elements as part of a kitchen island and stairs leading to one of the loft spaces. Old beams frame the loft spaces.

Scaravelli describes the many walls and doors originally in the 1,400-square-foot house as obsolete and confining.

He describes the new open space this way: “This is sophisticated and poetic real estate developed as a platform for living based on freedom.”

A transformation all done for $9,700.

The model is so promising because it is so cost-efficient, said Terry Schwarz, director of Kent State University’s Cleveland Urban Design Collaborative.

Loft homes “offer a very low-cost, high-impact design-on-a-dime strategy.”

“I’m wondering what other kinds of tricks you could pull off with $10,000,” Schwarz said.

She said a group of “creative young students” will look for options other than loft homes at the same price point.

The “design on a dime” strategy offers a new twist in the city’s battle to stem population loss. Most of these efforts have focused primarily on higher-end products often aimed at luring suburbanites. This includes downtown apartments and custom homes, like those in Hough or Mill Creek, a subdivision that bills itself as offering “urban living with suburban flair.”

“It is not pristine,” Schwarz said of the loft home. “It is not a perfect housing unit, but it is just cool enough that I think it is really a promising idea.”

Housing Court Judge Raymond Pianka agrees, especially when you consider the probable alternative — vacant lots, which he says can have “a blighting influence” on a neighborhood.

“I like the concept, but I think it needs work,” he said, adding that the homes would be more appealing with higher-end finishes, which he says could be done and still keep the project affordable.

Fleming agrees. He said the existing loft homes are particularly appealing to younger people, a demographic the city has had success in attracting. Many are being priced out of places like downtown and Ohio City and can be drawn to St. Clair-Superior’s more affordable housing. Such housing, because it offers live-work space, also offers an opportunity to expand the artist community already in the area, he said.

Andrea Bruno, the nonprofit’s housing coordinator, said the loft homes are an example of “rust belt chic” because they appeal to artists and others of the “creative class.” The term loosely focuses on how an old, industrial city like Cleveland can embrace its past as a springboard for growth. When she placed an item about the loft homes in a community newspaper, she got more than a dozen inquiries. Many came from younger people drawn to both the historic and forward-looking nature of a uniquely Cleveland product.

Arleen Crider, 27, makes no qualms about it. A nurse with an interest in interior design, she likes living in trendy neighborhoods, places like Tremont and Ohio City.

“I am the girl who loves a fab apartment,” she said.

So when Scaravelli suggested a property outside of those neighborhoods, she really wasn’t interested, even at rent that was half the price. Then she remembers opening the door to the house on Schaefer.

“It totally blew me away,” she said. “There was so much character there.”

Crider ended up taking the house on East 47th Street, where she got to add some of her interior design skills, since the rehab was under way.

The East 47th Street home is in Councilman Jeffrey Johnson’s ward, as is another project in Glenville, also in his ward. For him, loft homes are proof that pursuing a “Shrinking Cities” philosophy isn’t Cleveland’s only option. That philosophy asserts that it is improbable that cities like Cleveland — which has less than half the population it had more than a half-century ago — will grow. The strategy focuses on massive demolition and redirecting residents to certain neighborhoods as a way to make delivery of city services more efficient.

Johnson said the loft home approach probably works best in St. Clair-Superior, where more working-class housing was built. In the historic districts in his ward — including those in Glenville and University Circle, where housing for the affluent was built decades ago — restoration is a better option, he said.

If there is no money for restoration, he advocates money for mothballing these projects, which helps save structures from deterioration, instead of tearing them down.

Such complications are common for redevelopment in the city. That is why the relatively simple solution the loft homes present has garnered such excitement. Schwarz jokes that after touring a loft home in December, she may have received a sign about the model’s future.

“I went to East 55th Street and there was this insane rainbow,” she said.

But in Cleveland fashion, it wasn’t that simple.

“It happened on one of those weird days where it was sunny and snowing at the same time,” she said.