How Best to Save a Neighborhood: Demolition v. Rehabilitation

On July 7, The Plain Dealer published two articles that offer differing opinions on how best to save a neighborhood regarding the use of monies from the 'Hardest Hit Fund.'

How best to save a neighborhood? The case for demolition: Jim Rokakis

These are difficult times for Ohio cities. Foreclosures -- while on the decline -- are still three times their "normal" pre-foreclosure-crisis levels. Add to that problem the now-vacant thousands of structures -- made vacant largely as a result of the crisis -- and it is obvious Ohio is suffering from a double-whammy of ailments. Sadly, there is no end in sight.

For that reason, it was good news last month when the U.S. Department of the Treasury, after considerable lobbying from Northeast Ohio members of Congress and community leaders, agreed to allow a portion of the "Hardest Hit Fund" -- money set aside by the Obama administration in 2009 to assist distressed homeowners facing foreclosure -- to be used for blight clearance as well. Michigan already has moved $100 million to blight clearance. Ohio is considering at least $60 million.

The White House and Treasury understand that vacancy abatement is a national priority, since the collapse of Fannie Mae and Freddie Mac and their takeover by the federal government means that we are backstopping nine of 10 mortgages in this country. They understand that vacancies are lowering property values. They understand that neighborhoods with abandoned homes are less safe. Most important, they understand that vacant properties are shaking the confidence of homeowners to the extent that they are starting to walk away from these mortgages -- and that the federal government will have to make good on these mortgages.

This new commitment of funds (to be administered by the Ohio Housing Finance Agency), when added to the commitment of Attorney General Mike DeWine of $75 million from "robo-signing" settlement dollars (leveraged to $122 million by local match dollars), means that more than $180 million will have been committed to vacancy abatement in just the past two years -- a good start toward the $1 billion needed to remove the more than 100,000 empty and abandoned residential structures in Ohio.

What has this meant for Cuyahoga County and its cities? For starters, it has taken these demolition costs off the backs -- and budgets -- of struggling local communities. It has freed up police departments from constant complaints related to vacant properties. It will also allow cities greater flexibility with future block grant and Neighborhood Stabilization Program awards for rehabilitation of existing housing stock. And perhaps most important is that, as distressed properties come down, adjoining property owners will begin to regain some of the lost equity that this crisis has stripped from them, as multiple studies have proven -- and continue to prove -- that the demolition of distressed properties increases the value of surrounding properties.

Last month, I spoke at the annual meeting of the Home Repair Resource Center in Cleveland Heights and was approached by residents of South Euclid, Cleveland Heights and Shaker Heights who were grateful that vacant and abandoned properties in their neighborhoods had recently been demolished. One of these residents, a woman on Altamont Avenue in Cleveland Heights, told me, "I am so much more hopeful about the neighborhood now."

It is perplexing to me how some local political figures have seized on news that has been so positively received around the state with negative and angry remarks, attacking the Cuyahoga County land bank and demanding that some of these funds be used to "fix up and not tear down." The intimation of these criticisms is that somehow the land bank and these newly developed funding streams dedicated to blight removal are responsible for the outmigration from Cleveland neighborhoods and are preventing home rehabilitation.

This is, of course, ridiculous.

The city and county offer almost a score of programs to repair and rehabilitate housing in Cleveland. One such program -- the county's Housing Enhancement Loan Program -- offers home repair loans at 1 percentage point interest. The city offers the highly regarded Afford-A-Home Program and a total of 15 other programs designed to help homeowners who desire to repair or rehabilitate their property. The notion that has been created by some -- that demolition is being done at the expense of home rehab programs -- is simply not true. In fact, it is the removal of distressed properties -- properties that are not historic and that are beyond repair -- that makes people more willing to stay and fix up their own properties.

People will repair their homes when they feel that there is stability in their community and that their investment is not at risk. These dollars for blight clearance should serve as the beginning of a planning process to decide where these dollars are best spent and to target demolition and rehabilitation efforts.

This never has been, nor will it ever be, an either-or proposition, but with these new funds at least communities have a chance to address both.

Rokakis, founding head of the Cuyahoga County land bank, now leads the Thriving Communities Institute, part of the Western Reserve Land Conservancy.


How best to save a neighborhood? The case for rehabilitation: Jeffrey Johnson

The fight to save our neighborhoods by removing abandoned houses through demolition appears to many to be a rational and important strategy. We have heard from some that vacant structures lower the values of surrounding properties and have devastated the local property tax base. Jim Rokakis, director of the Thriving Communities Institute, recently said: "Our studies showed that demolitions increase property values; increased property values mean more stability and more stability means fewer foreclosures."

It is easy to be persuaded by what appears to be a strong argument for demolition as a logical strategy for growth in our communities. Many of our most influential leaders have jumped on the demolition bandwagon. Members of Congress, state and local officials and others have all joined in to sing the same song of "demolition now."

I believe, however, that all of them are tone deaf to the long-term negative impact of their message to our communities.

The fundamental issue is, how do we stabilize the neighborhoods damaged by the housing crisis? In Cleveland, in Cuyahoga County and around Ohio, abandoned houses have become the source of concern. The problem with the "demolition now" approach expressed by Mr. Rokakis and others is that it is short-sighted and surrenders to a cynical belief that nothing works better than demolition. I don't believe demolition is the best way to create stability in our neighborhoods. Rehabilitation works better. Property values are higher next to a rehabilitated house than a garden on a restored vacant lot, and nothing helps to prevent foreclosures more than the rehabilitation of nearby vacant houses.

Within our neighborhoods are thousands of residential and commercial structures that need to be demolished. They are well past our ability to save. This we agree on. However, there are also thousands of vacant and abandoned structures that should not be removed. This is where we disagree.

An empty house is not necessarily a blighted house or an eyesore.

I do not believe we should demolish a house because it is empty and abandoned.

Rokakis and others claim to be selective with their demolition strategy, but what is actually occurring in the streets doesn't reflect that. I believe if we all work hard enough to save the housing and commercial structures of our neighborhoods, people will stay in Cleveland and many others will return.

The problem with the aggressive pursuit of demolition funds by our leaders is that it is done with demolition as its only purpose. Their pursuit must also be an effort to secure resources that provide the flexibility to do whatever is required for a specific house on a specific street.

We need a strategy big enough to respond to the complexity of the problem.

In the Glenville and St. Clair-Superior neighborhoods, I am trying to apply the flexibility needed to stabilize individual streets without losing valuable and irreplaceable houses and commercial structures. I advocate for the rehabilitation of the many abandoned houses that are not blighted or attractions to crime. My efforts are made more difficult because of little funding made available by local, county and state government, and because too many of our leaders and advocacy groups are not fighting for such funding.

I have also had to "mothball" some houses while we work to secure the resources to rehabilitate them, while the others that should be rehabilitated are being demolished by the Cuyahoga County Land Bank and the city of Cleveland.

We are losing many houses not because they are eyesores, but because these public entities have designed an assembly-line demolition system focused on removal rather than restoration.

A balanced, neighborhood-based housing strategy that is comprehensive is needed, a strategy that recognizes the equal need to rehabilitate empty structures, enforce housing and building codes, provide fix-up assistance to owners of occupied structures and do selective demolition. This balanced approach is better than what is occurring today and would have a significant impact. If we all work together to do this, we will achieve enhanced property values, increase our ability to avoid foreclosures and stabilize our unique and wonderful neighborhoods.

Johnson represents Cleveland Ward 8 on City Council.

To view the online articles, please click here: Demolition or Rehabilitation


About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

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