Proposed Federal Legislation could Generate Millions of Dollars for Demolition in Cleveland (Plain Dealer)

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Proposed Federal Legislation could Generate Millions of Dollars for Demolition in Cleveland (Plain Dealer)

CLEVELAND, Ohio — The Cuyahoga County Land Bank soon might be empowered to issue millions of dollars worth of federal tax credit bonds to pay for demolition of vacant, abandoned and blighted properties.

An Ohio delegation from the U.S. House of Representatives announced Wednesday the introduction of legislation to distribute bonds worth $4 billion to states or land banks nationwide to stabilize neighborhoods by clearing the ruins of the foreclosure crisis from urban areas.

The bill’s co-sponsors, Republican Dave Joyce and Democrats Marcia Fudge and Marcy Kaptur, said during a news conference in the heart of Cleveland’s foreclosure-ravaged East side that the initiative was designed specifically to help urban centers like Cleveland.

The city has spent $50 million in the past six years on demolition and still has about 9,000 condemned structures to raze, Mayor Frank Jackson said during the event.

Jackson said the bill, the Restore Our Neighborhoods Act of 2013, would bring the kind of cash infusion the city needs “to get rid of the worst of the worst,” as part of a housing strategy that balances the need to clear land for re-development with a plan to salvage homes that hold promise for investors.

The bill’s announcement fanned the flames for some preservationists who believe the city and land bank has embraced an overly-aggressive approach to demolition.

City Councilman Zack Reed said during the news conference that he supports the effort to acquire funds for restoring neighborhoods, but the city’s housing plan should be flexible and include rehabbing properties.

“Those that need to come down, need to come down,” Reed said. “Those that need to be saved, need to be saved. If you give that money to some people they will go through our community with a bulldozer and leave it looking like Hiroshima after World War II. I don’t want my ward to look like that.”

Reed said in an interview after the news conference that the city and land bank have torn down houses that should have been spared, adding that the demolition campaign will destroy Cleveland’s neighborhoods if unchecked. He said he has asked Council President Martin J. Sweeney to call for a moratorium on demolitions until a comprehensive housing plan is developed.

Reed, who was invited to represent council at the event because the chosen location was in his ward, said he felt the need to speak out on behalf of other preservationists who believe the city should invest in restoring its once livable and architecturally valuable homes.

Joyce, Fudge and Kaptur took turns at the podium Wednesday, describing the devastation and urban decay that vacancy and blight have imposed on the communities they represent.

Vacant properties are neighborhood hazards and havens for criminals and vagrants, they said. As homes are ransacked and stripped of copper wires, aluminum siding and other valuable materials, they become eyesores that drive down the values of surrounding properties and lead to a domino effect of foreclosures.

Homes in Cuyahoga County have degraded in value by $76 million in recent years, and Ohio has lost $20 billion in home equity overall, Kaptur said.

The proposed bill grants states or land banks the authority to sell federal bonds to fund demolition. Investors receive interest payments in the form of tax credits applied to their tax bill each year until the bond reaches maturity.

The land bank likely would set up a special account, using contributions from state and local sources, philanthropic donations and its own budget, land bank officials said. Interest accrued on that account would pay the debt at the end of the 30 year term.

According to the bill, $2 billion worth of demolition bonds will be divided evenly among the states. The other half will be dispersed among those with excessive numbers of vacant structures and high unemployment rates.

All told, Cuyahoga County could raise at least $40 million toward its demolition effort, said Cleveland’s Building and Housing Director Ed Rybka.

It costs about $8,000 to demolish a house.

The legislation also lends flexibility to federal money given to states in 2010 intended to help ease hardships of homeowners facing foreclosure. The so-called Hardest Hit Fund was designed to help 26,000 homeowners statewide with as much as $15,000 in financial assistance. The money was to go to their mortgage-servicing companies to help cover late or current payments, reduce the loan balances or help homeowners leave houses that can’t be kept.

The Ohio program received about $320 million.

But two years later, many states, including Ohio, are sitting on that money, the U.S. representatives said Wednesday. The proposed bill allows the money to be used instead for demolition and threatens to relinquish 25 percent of the portion that remains unused after two years.

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