F ig hting Blig ht in the Northe a st- Midwe st: A Brie fing on Va c a nt a nd Aba ndone d Prope rty a nd the F e de ra l Re sponse Ma y 24, 2016, 3-4:30pm 2103 Ra yb urn Ho use Offic e Building
F ig hting Blig ht in the Northe a st- Midwe st • Blig ht in the Re g io n • T he F e de ra l Re spo nse – Pro g ra ms – L e g isla tio n • Re c o mme nda tio ns
Highe st Vac anc y Rate s among the 75 L ar ge st Citie s, 2010–14 Rank City Vacancy Rate (%) Vacant Units 29.4 1 Detroit, Michigan 106,778 21.1 2 Cleveland, Ohio 44,701 20.2 3 St. Louis, Missouri 35,411 18.9 4 Cincinnati, Ohio 30,580 18.5 5 New Orleans, Louisiana 35,358 17.9 6 Atlanta, Georgia 40,518 17.8 7 Baltimore, Maryland 52,907 16.3 8 Buffalo, New York 21,794 15.9 9 Memphis, Tennessee 47,098 15.6 10 Newark, New Jersey 16,965 14.7 11 Toledo, Ohio 20,295 14.1 12 Kansas City, Missouri 31,743 13.9 13 Pittsburgh, Pennsylvania 21,599 Source: 13.6 14 Indianapolis (balance), Indiana 51,792 American 13.4 15 Jacksonville, Florida 49,444 Community Survey, 12.9 16 Philadelphia, Pennsylvania 86,559 5-yr est. 12.7 17 Orlando, Florida 15,575 Does not include 12.5 18 Chicago, Illinois 148,679 seasonal, 12.4 19 Houston, Texas 113,253 recreational, or 12.1 20 Columbus, Ohio 45,844 occasional use properties.
% Inc r e ase s in # of Nonse asonal Vac anc ie s by State be twe e n 2000 and 2010 Source: Government Accountability Office, 2011
F e de r al Pr ogr ams: T he Good Ne ws • ho using / c o mmunity de ve lo pme nt • e c o no mic de ve lo pme nt • b ro wnfie lds • g re e n infra struc ture • urb a n a g ric ulture / fo re stry • histo ric pre se rva tio n
Source: Youngstown Air Reserve Station, 2015
Source: Eat to Live Englewood
F e de r al Pr ogr ams: T he (Mostly) Bad Ne ws • T he Co mmunity De ve lo pme nt Blo c k Gra nt (CDBG) Pro g ra m • T he HOME I nve stme nt Pa rtne rships Pro g ra m (HOME ) • T he Bro wnfie lds Sta te a nd T rib a l Re spo nse Pro g ra m • T he Ne ig hb o rho o d Sta b iliza tio n Pro g ra m (NSP) • T he Ha rde st Hit F und Blig ht E limina tio n Pro g ra m
• CDBG – Curre nt funding : $3 b illio n – ↓ 72% since 1975 (inflation -a djuste d) – Number of entitlement communities ↑ • HOME – Curre nt funding : $950 millio n – ↓ 57% since1992 (inflation -a djuste d) • Bro wnfie lds Sta te & T rib a l Re spo nse – Curre nt funding : $48 millio n – ↓ 27% since 2003 (inflation -a djuste d) – demand ↑
Har de st Hit F und State s, HHF Blight E limination Ranke d by Alloc ation Pr ogr am 1 California • Mic hig a n 2 Florida 3 Ohio • I llino is 4 Michigan • Ohio 5 Illinois 6 North Carolina • I ndia na 7 New Jersey • Ala b a ma 8 Georgia • So uth Ca ro lina 9 South Carolina 10 Oregon 11 Tennessee 12 Arizona 13 Indiana 14 Kentucky 15 Nevada 16 Alabama 17 Mississippi 18 Rhode Island 19 Washington DC
oduc e d in 114 th Congr L e gislation Intr e ss • Ame nd , e xte nd, o r ma ke pe rma ne nt ta x c re dits/ inc e ntive s: – Ne w Ma rke ts T a x Cre dit E xte nsio n Ac t (HR 855/ S 591) – Bro wnfie lds Re de ve lo pme nt T a x I nc e ntive Re a utho riza tio n Ac t (HR 2002)/ CL E AN UP Ac t (S 2734) – Histo ric T a x Cre dit I mpro ve me nt Ac t (HR 3846/ S 2655) • Re a utho rize pro g ra ms o r funds: – BUI L D Ac t (S 1479)/ Bro wnfie lds Re a utho riza tio n Ac t (HR 4463) – Na tio na l Hs. Pre se rva tio n Ame ndme nts Ac t (HR 2817)
e gislation (c ont.) L • E sta b lish ne w pro g ra ms: – Bro wnfie ld Re de ve lo pme nt a nd E c o no mic De ve lo pme nt I nno va tive F ina nc ing Ac t (HR 3098) – Gro undwo rk USA T rust Ac t o f 2015 (HR 3707) • Pre ve nts va c a nc y/ a b a ndo nme nt b y re q uiring q uic ke r re spo nse s to sho rt sa le o ffe rs fo r ho me s in fo re c lo sure : – Va c a nt Ho me s Ac t (HR 3203) • Allo ws fo r a te mpo ra ry c a pita l g a ins de fe rra l in e xc ha ng e fo r re inve stme nt: – I nve sting in Oppo rtunity Ac t o f 2016 (HR 5082/ S 2868)
Re c omme nda tions • I mpro ve suppo rt fo r e xisting pro g ra ms thro ug h a utho riza tio n o r a ppro pria tio n • Mo dify e xisting pro g ra ms/ funds – T o prio ritize b lig ht re spo nse – T o b o o st lo c a l c a pa c ity • Cre a te —o r re -e sta b lish—de dic a te d re so urc e s
Que stio ns? F o llo w Our Wo rk: Co lle e n Ca in, Ph.D. www.ne mw.o rg c c a in@ ne mw.o rg 202.464.4005
The Impact of Blight On Housing Market Recovery The View From Cuyahoga County, Ohio _______ Briefing for Congressional Staff Frank Ford Senior Policy Advisor, Western Reserve Land Conservancy fford@wrlandconservancy.org 1-216-407-4156 May 24, 2016 1
The Foreclosure Crisis Began in Cleveland Well Before Most of the Country “Two Big Funds At Bear Stearns Face Shutdown. As Rescue Plan Falters Amid Subprime Woes, Merrill Asserts Claims” -Wall Street Journal headline June 12, 2007; one of the first alarm bells of the mortgage crisis. “What is really behind the mushrooming rate of mortgage foreclosures since 2007? ” -Commentary in the Wall Street Journal by Stan Liebowitz, University of Texas, 7/3/09. But, in Cuyahoga County : Mortgage foreclosure fueled by subprime lending doubled between 1995 (3,000) and 2000 (6,000), doubled again by 2007 (12,000). 2
Domino Effect Foreclosure Vacant Homes Blight Home Sale Prices Down - Property Value Down Lost Homeowner Equity Lost Property Tax Revenue for Schools, Police, Fire Cash-strapped Cities Bear Burden of Nuisance Abatement, Board-up and Demolition 3
Scale in Cuyahoga County • Over 80,000 foreclosures 2000 to 2012. • 42,565 properties sold at Sheriff Sale. • 38,931 unduplicated properties. Approximately 1/3 experienced “failure”: – Vacant, or – Condemned, or – Demolished, or – Tax Delinquent Properties acquired by land banks, CDCs or government entities were 4 times less likely to fail than those acquired by private parties. “The Role of Investors in the One-to-Three Family REO Market: The Case of Cleveland”, Harvard University, 2013. http://www.jchs.harvard.edu/research/publications/role-investors-one- three-family-reo-market-case-cleveland 4
Home Vacancy (since 2010) 5
Housing Blight as of 2016 72% of the homes requiring demolition are in the City of Cleveland. 6
Rehab or Demolish the 7,200 Most Blighted? The Question Should Be Viewed Through a Market-Conscious Lens
Median sale prices are lowest in the areas with the greatest vacancy and blight. 8
9
A TALE OF TWO HOUSES 2620 E. 114 th – foreclosed 2616 E. 114 th Street - New by Wells Fargo then sold home built by Buckeye Area to an investor who did Development Corporation. nothing. Eventually Sold for $141,000 in 2004. condemned by the City of Appraised value in 2014 was Cleveland. $71,900; now $61,100 in 2016.
NSP Funded Rehab and Demolition Substantial Rehab Remove 9 Vacant 1 Vacant Blighted Home Blighted Homes by (NSP average 2009-12) Demolition Soft Costs 25 K 90 K 90 K Subsidy Subsidy Rehab 140 K 90 K sale price Acquisition 15 K $180,000 $90,000 $90,000
REO Study Analysis: Test Homes In Six Neighborhood Markets Subsidy (red) or Surplus (black) Neighborhood Address Gut Rehab Code Plus Code Only Old Brooklyn 4107 W. 48 (29,296) 9,339 31,006 North Collinwood 15615 Trafalgar (55,146) (30,999) 8,875 Slavic Village 3655 E. 54 (70,504) (28,871) 3,980 South Euclid 3866 Salisbury (61,274) (24,440) 6,229 Euclid 19400 Ormiston (64,909) (20,177) (1,464) Stockyards 5628 Pacific (73,239) (40,517) (16,740) Code Only = Replace mechanicals and finishes only if code not met. E.g. older furnace stays if it works. No sidewall or attic insulation. No Green Standards.
Summary of Findings Gut Rehab : Does not work in any of the neighborhoods we studied, including Old Brooklyn. Mod Rehab : Only worked in the stronger Old Brooklyn neighborhood. Code Plus : Also only worked in the stronger Old Brooklyn neighborhood. Code-Only : Is feasible but offers little sustainability, and does not provide for green standards. $10,000 Gap : On a case-by-case basis, re-engineering Code-Only spec to arrive at a $10K gap does permit significant upgrades. “The Role of Investors in the One-to-Three Family REO Market: The Case of Cleveland”, Harvard University, 2013. http://www.jchs.harvard.edu/research/publications/role-investors-one- three-family-reo-market-case-cleveland
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