Ohio is one of the focal points of this Bloomberg story that looks at how states plan to use their share of the national foreclosure settlement.
Some are using it to fill budget holes, while others will apply their money to key programs such as education. Ohio, which is receiving $97 million in its direct payment from last week’s settlement, plans to allocate $75 million to demolish vacant and dilapidated homes dragging down the values of neighboring properties.
Attorney General Mike DeWine says at least 100,000 homes need to be demolished, and he’s is establishing a program to match funds that cities and land banks allocate for tearing down houses.
Jim Rokakis, a former Cuyahoga County treasurer who now directs the Cleveland nonprofit Thriving Communities Institute, tells Bloomberg that using the settlement money for that purpose is appropriate because many homeowners are paying their mortgages and did nothing wrong, yet they face plummeting property values because of foreclosures around them.
“If you don’t take these homes down, these neighborhoods will continue to lose what little value they have left, they will be less safe and there will be zero chance of those neighborhoods coming back,” Mr. Rokakis says. “You can’t build the new American city until you take the old one down first.”
He’s right about that. But it’s worth keeping in mind this story, from MarketWatch.com, in which Sandra Pianalto, the president of the Federal Reserve Bank of Cleveland, notes that the challenge of vacant and abandoned housing in older industrial cities such as Cleveland will not be solved by a single program or one governmental or private organization.
“Instead, community development organizations must play an integral role in revitalizing neighborhoods,” Ms. Pianalto said in a Feb. 10 speech (the transcript is here) to a housing summit in Cleveland.
While razing low-value and abandoned properties can help nearby property values, it is not enough by itself and attention must be paid to the demand side of the market, MarketWatch.com notes.
“Demolishing low-value housing stock may not have a lasting or significant impact in increasing property values, unless there is a strong, ongoing interest in the land itself,” Pianalto said.