by Chuck Hoven
(Plain Press, June 2017) As part of its strategic plan, Ohio City Incorporated (OCI) is charged with finding a way to provide affordable housing in the neighborhood. OCI Executive Director Tom McNair says the easiest way to make affordable housing available in the neighborhood is through existing housing stock. He says it is “a heck of a lot cheaper” to take an existing house and rehab it to make it code compliant than to build a new house.
McNair says OCI has worked with the City of Cleveland and Cuyahoga County land banks to make sure abandoned or foreclosed homes don’t go into the sheriff’s sale, but instead come to OCI. McNair says the idea is to keep the homes out of the hands of flippers. He says typically these are homes where a long-time resident doesn’t have the resources to stay in the home.
The land bank then clears the title and gives the property at no cost to OCI. McNair, using the Cuyahoga County Land Bank as an example, explained that OCI has an agreement with the County Land Bank to transfer the homes to a qualified homeowner or developer at a price capped at $5,000. He says OCI receives the same fee from qualified individual homeowner or a developer.
In the case of a recent home in the neighborhood that the County Land Bank transferred to OCI, McNair says OCI sent out notices to its block clubs to “try to see if anyone was looking for a home.” They also sent out letters to developers who rehab homes in Cleveland. The only response they received was from Cleveland Bricks, a company that rehabs homes in Cleveland.
A neighbor to the abandoned house, who had been trying to purchase the house for four years, noticed that OCI now had title to the house, and sent a letter to OCI about her interest. The neighbor hoped to move into the house after rehabbing it to make it wheelchair accessible. McNair called this contact unusual. He said, upon getting the letter, he immediately contacted the staff person working to negotiate with Cleveland Bricks to stop the process. Then the neighbor, who wished to purchase the house was asked to send her plans for rehabbing the house and prove that she had the financial means to go forward with the plans. That information was given to the OCI Real Estate committee to decide whether to accept the proposal.
McNair says OCI is looking to form a long-term strategy to make sure affordable housing is available in the neighborhood. He said simply making houses available to developers at a low cost does not assure affordability. He says developers can get a land bank lot for $500 and turn around and build a $500,000 house on it and offer it for sale. Or, developers can get a land bank house for $5,000, rehab it and rent it out at a very high monthly rate.
To come up with a plan on how to address the issue of affordable housing, McNair says OCI has teamed up with Tremont West Development Corporation to research the issue. McNair says both neighborhoods have similar housing markets. They are looking for models that have worked in other neighborhoods to keep housing affordable.
McNair says one way that is being discussed is to come up with a rehab partner and manage the process so houses are available for sale at an affordable price, or to develop a rental model where OCI plays a role as a partner.
Several neighborhood residents, asked about this process, offered their suggestions. One former OCI Board Member suggested that OCI wave the $5,000 fee for eligible homeowners who want to rehab a house in the neighborhood and live in it. A former Near West Housing Board Member suggested that OCI transfer title, without any fee, to individual residents or families wishing to rehab a house in the neighborhood, but charge a $10,000 fee to developers.
The Cuyahoga Land Bank itself may provide OCI and TWDC with a model. In the organization’s recent blog featured a woman who purchased a home through the Cuyahoga Land Bank’s Buying and Retaining Academic Interest Now (BRAIN) Program. According to the blog (blog.cuyahogalandbank.org), “The BRAIN program offers discounts of up to 20 percent on renovated homes in select communities to those currently enrolled in a college or post-graduate degree program or those who submit an application within two years of graduation. Homes are completely renovated and move-in ready…”