What to do with the vacant homes in Cleveland is a quandary

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What to do with the vacant homes in Cleveland is a quandary

February 3, 2013 [Leila Atassi, cleveland.com]

CLEVELAND, Ohio — On a late-November afternoon, Cleveland City Councilman Jeffrey Johnson drove slowly down Drexel Avenue, past large colonial homes set back from the quiet street, and pointed out the vacant properties he hopes he can save.

In the hands of the right investors, these homes could be restored to their former glory, Johnson said. One in particular, he boasted, is full of historical charm and holds great promise. And he proudly explained how he had managed to persuade the city’s housing officials to remove it from the demolition list and let Johnson’s community development corporation keep it boarded and free from debris while waiting for an investor.

But Johnson’s eyes widened as he approached the lot. The house was gone. Nothing remained but a pile of dirt beside a newly leveled plot, reminiscent of a fresh grave.

“Oh, my goodness,” Johnson said. “Talk about your heart dropping. Am I in the right place?”

The moment illustrates the great debate about what to do with Cleveland’s glut of vacant housing. On one side are some city leaders and community development gurus who say demolition is the answer. On the other are Johnson and preservationists who say the city should invest in restoring its once livable and architecturally valuable homes.

The Cleveland City Council now is poised to co-sponsor a study aiming to further the demolition agenda and persuade the federal government to set aside more money for tearing down houses.

Proponents of the study hypothesize that the city’s thousands of vacant structures not only drain the value from surrounding occupied homes but also lead to a domino effect of foreclosures, as insolvent homeowners walk away from their investments, surrounded by blight. Demolition, the study proposal suggests, is key to curbing that urban decay.

But Johnson, a vocal advocate of housing restoration in his Glenville neighborhood, argues that the study is shortsighted and designed with a single-minded focus on demolition without consideration of alternative strategies for dealing with Cleveland’s housing crisis.

He vowed last week to fight against the council’s sponsorship of the study.

“They’ve already arrived at conclusions on an issue that deserves debate,” Johnson said in an interview Wednesday. “Their original premise is that vacant buildings must go. And they want this study to legitimize their opinion, when in fact a number of us don’t agree that demolition is the right solution.”

Thousands of houses awaiting demolition

On one point, there is no debate: The historic loss of industry and the effects of the foreclosure crisis have left Cleveland’s population dwindling to about 400,000 people with an aging housing stock that was built for more than a million.

The city estimates that as many as 15,000 houses are vacant; more than half are condemned and awaiting demolition.

The Cuyahoga County land bank was created in 2009 to preside over the problem. Through agreements with Fannie Mae, the U.S. Department of Housing and Urban Development and other mortgage companies, the nonprofit organization has acquired title to nearly 3,000 foreclosed and distressed properties countywide.

The land bank, which is funded largely by federal grants and by penalties and interest on unpaid real estate taxes, receives about 110 properties a month. It has demolished more than 1,400 houses since its inception and expects to raze 1,000 more this year, thanks to an $8 million infusion from a nationwide settlement with mortgage lenders, earmarked for demolition in the aftermath of the foreclosure epidemic.

But that money will run out by year’s end. So a Cleveland contingent, led by City Councilman Tony Brancatelli and Jim Rokakis, director of the Thriving Communities Institute, traveled to Washington, D.C., in September to ask for money and testify before the Interagency Meeting on Residential Property Vacancy, Abandonment and Demolition.

The event drew representatives of Midwestern cities and the U.S. Treasury and high-ranking officials in the Department of Housing and Urban Development, among others, to discuss using demolition to improve property values and stabilize neighborhoods.

Those who attended said that Treasury officials met their pleas with a challenge: Prove empirically that razing vacant structures reduces the number of foreclosures in the surrounding area, and the federal government will consider offering more money for demolition.

Rokakis set to work assembling a team of some of the country’s leading researchers and consultants on the subject.

The proposed study, titled “The Case for Demolition: Less About Destruction, More About Growth,” is billed as an evaluation of demolition in Cuyahoga County and lays out a databased method of analyzing the relationship between demolitions and foreclosures within given radii.

Rokakis said in an interview Thursday that nine of the 15 land banks throughout the state, including Cuyahoga County’s, have signed on as sponsors. The study is expected to wrap up by the end of the year and will cost $132,500. The Cleveland City Council will be asked to supply $50,000 of that, he said.

The study promises to be groundbreaking. Never before have researchers tried to connect the dots between demolition and foreclosure, Rokakis said.

“We know we can prove one part of the equation,” he said, referring to a housing study in Flint, Mich., that showed that demolition of vacant homes added value to surrounding property. “The tougher part is proving there are fewer foreclosures. But we’ve got all kinds of evidence to make a very good case. We have to strike while the iron is hot.”

Rehabilitation vs. demolition

Councilman Johnson says the title of the proposed study alone betrays a lack of objectivity and an almost dogmatic pursuit of large-scale demolition over rehabilitation.

As he drove down streets in his East Side neighborhood, Johnson stopped to point out vacant homes that he believes still hold promise for the right investors. Some have been ravaged by vandals seeking copper wiring or other valuables. But the houses have good bones, Johnson explained, and they boast charming design elements like hardwood floors, ornately carved mantels or marble detailing — features one rarely finds in newer construction.

Still, many of them appear on the land bank’s demolition list, which Johnson refers to as “death row.”

The councilman and a handful of his colleagues have fought to practice what is commonly called “mothballing” — boarding up, winterizing and keeping watch over certain vacant properties until worthy investors come along. Johnson said he has persuaded the city’s building and housing director, Ed Rybka, and Cuyahoga County land bank President Gus Frangos to pardon eight properties in his ward from demolition.

One of them was the house on Drexel, leaving him with seven. In that case, Johnson later learned, the building department already had asked the land bank to handle the demolition by the time the councilman had requested a stay. The city mistakenly never told the land bank about the plan to mothball it.

In most cases, it takes a house about a year from the time it enters the land bank’s inventory to meet the wrecking ball, Frangos said. Sometimes the land bank grants an additional six months to give council members or their community development corporations time to find investors. In other cases, the land bank gives the agencies titles to the properties — leaving it up to them to pay for insurance and maintenance in the meantime.

Johnson said the Glenville Development Corp. has some money in its budget for a mothballing program. But attracting investors is a major challenge. He hopes to duplicate a model that Councilman Brian Cummins uses in his ward.

Cummins’ development corporation representing the Stockyard, Clark-Fulton and Brooklyn Centre neighborhoods scans property records to find responsible investors who already own multiple houses in a neighborhood and approach those owners about adding vacant-property rehabs to their portfolios.

Cummins said in an interview Friday that the development corporation has found investors for 40 properties during the past 18 months.

That kind of creativity should be encouraged, Johnson says, yet the proposed demolition study undermines those efforts of council members trying to resurrect the city’s housing stock. The council should support a study that compares the results of demolition and rehabilitation, rather than one designed to prop up a predetermined conclusion, Johnson said.

“I disagree with the notion that demolition spurs growth in a community,” he said. “Demolition should be in your toolbox, no question. I’ve had several houses that were beyond hope and needed to come down. But that should always be a last resort.”

As for Drexel Avenue, where three more vacant houses await their fate, Johnson has drafted legislation to declare that entire street a historic landmark — meaning any plans for demolition must first pass muster before the city’s Landmarks Commission.

Councilwoman Dona Brady has done the same in pockets throughout her West Side ward, too.

She said in an interview Thursday that her development corporation is always searching for investors, particularly those who want to live in the homes they rehab. Brady says that in the 12 years she has been in office, only about two dozen homes have been torn down in her ward.

She, too, demands a debate with her colleagues before the council lends its support and pledges money toward the demolition study.

“We should study how we can better rehabilitate and save our homes,” Brady said. “What is a city without its neighborhoods? And what is a neighborhood without these homes?”

City simply has too many houses, councilman says

Proponents of the demolition study say that the arguments by Johnson and Brady are myopic and irrational.

Cleveland simply has too many houses, says Councilman Brancatelli, and the vacancy rate continues to climb. He said he and his camp are proponents of rehabilitation, too. But the majority of vacancies quickly become unsalvageable, destroying the value of surrounding homes.

If that effect isn’t mitigated through demolition, eventually nothing will be worth saving, he said.

Frangos defended the land bank against Johnson’s accusation that it devalues rehabilitation, saying the agency has sought to salvage what it can of its inventory. Since 2009, the land bank has sold more than 500 properties to investors at low prices under special agreements that require the buyer to follow specs on the job, pull permits and complete the work before taking title of the property.

Of those projects, 40 percent are owner-occupied, Frangos said.

The land bank also rehabbed 27 houses on its own dime. Only 17 have sold, and Frangos said he worries that the longer the others languish on the market, the more susceptible they become to vandalism.

The land bank has more than 1,300 properties in its current inventory, about 60 percent of which are slated for demolition, he said.

It’s usually the best option for all involved, Frangos said. Residents are happy to see the blight eradicated. And the land bank gives the cleared parcels to the city for use as community gardens, expanded yards for residents or new development — all of which increases the value of entire neighborhoods, he said.

The debate is in the middle ground, Frangos said, where a property is in decent shape but would cost a little too much to rehab, leaving investors uninterested.

“Neither the city nor the restoration society nor the community development corporations want to take that property and sit on it endlessly — constantly cutting the lawn, insuring it, boarding it up, chasing vandals out,” Frangos said. “It would be great if we could just mothball all of them for a new day, when investors flock to Cleveland. But the housing stock here was designed to accommodate close to a million people at one point. And not in one year, not in five, not in 10, is that population ever coming back.”