NEIGHBORHOODS Strategies to stabilize CLEVELAND MIDDLE - PowerPoint PPT Presentation

CLEVELAND MIDDLE NEIGHBORHOODS Strategies to stabilize CLEVELAND MIDDLE NEIGHBORHOODS

Middle Neighborhoods Field Jason Powers, Project Director Cleveland Middle Neighborhoods Initiative  Alan Mallach, Senior Fellow Center for Community Progress  Paul Brophy, Principal Brophy & Reilly, LLC  Charles Buki, Principal czb LLC PARTNER/PEER CITIES: Rochester, NY Baltimore, MD Erie, PA Detroit, MI Buffalo, NY Chicago, IL Plano, TX Akron, OH Pittsburgh, PA CLEVELAND Des Moines, IA MIDDLE NEIGHBORHOODS

Presentation Agenda  What is a Middle Neighborhood?  What is a Middle Neighborhood in Cleveland?  How do we identify a Middle Neighborhood?  How do we stabilize and grow Middle Neighborhoods; develop policies? CLEVELAND MIDDLE NEIGHBORHOODS

Baseline Understandings & Strategies • Public subsidy is scarce & subsidies alone cannot create a market • We must create conditions for investment to occur and leverage that private investment • In distressed markets, build from strength by investing near strong assets CLEVELAND MIDDLE NEIGHBORHOODS

Baseline Understandings & Strategies • With limited resources we must concentrate efforts in places where we can see the greatest impact . • The best decisions are based on the sound and objective analysis of quantitative and qualitative data CLEVELAND MIDDLE NEIGHBORHOODS

What is a Middle Neighborhood? What is a Middle Neighborhood in Cleveland? How do we identify a Middle Neighborhood? How do we stabilize and grow Middle Neighborhoods? CLEVELAND MIDDLE NEIGHBORHOODS

What is a Middle Neighborhood? “Not in deep distress, but not thriving either.” - Paul Brophy “Middle neighborhoods are neighborhoods that have retained a respectable measure of both their physical and social fabric, are not or not yet areas of highly concentrated poverty or hyper vacancy, and where stabilization and gradual improvement remain realistic strategies .” CLEVELAND -Alan Mallach MIDDLE NEIGHBORHOODS

Luxury Distressed Middle Neighborhoods Neighborhoods Neighborhoods Market Inefficiencies, Federal Funding and Private Capital & Deteriorating Housing Programs Market Rate CLEVELAND MIDDLE NEIGHBORHOODS

Strong Market Declining Value Activity Minimal Investment Private Investment Redevelopment Equitable Strategies Needed Development Needed Weak Demand, Limited Investment CLEVELAND Targeted Support can Spark Recovery MIDDLE NEIGHBORHOODS

Defining “Neighborhoods” CLEVELAND WARDS CLEVELAND MIDDLE NEIGHBORHOODS

Defining “Neighborhoods” CLEVELAND CDCs CLEVELAND MIDDLE NEIGHBORHOODS

Defining “Neighborhoods” CLEVELAND CENSUS TRACTS CLEVELAND MIDDLE NEIGHBORHOODS

What is a Middle Neighborhood? What is a Middle Neighborhood in Cleveland? How do we identify a Middle Neighborhood? How do we stabilize and grow Middle Neighborhoods? CLEVELAND MIDDLE NEIGHBORHOODS

2019 Regional Property Sales ($/ft 2 ) Data: NST , Zillow (non-estimates) Cleveland Average: $74 Regional Average: $111 Select Suburbs Luxury Neighborhoods Solon: $139 Ohio City: $190 Shaker Heights: $108 Tremont: $226 Beachwood: $154 Detroit Shoreway: $305 Lakewood: $144 Distressed Neighborhoods Strongsville: $113 Chagrin Falls: $154 Union Miles: $30 Lee-Seville: $24 CLEVELAND MIDDLE NEIGHBORHOODS

Regional Housing Market 350 Neighborhood Price Sq/ft (2019 Q4) 300 250 200 150 100 50 0

Cleveland Housing Market 350 Neighborhood Price Sq/ft (2019 Q4) 300 250 200 150 100 50 0

Regional Housing Market 350 Neighborhood Price Sq/ft (2019 Q4) 300 250 Middle Markets 200 150 100 50 0

Vibrant Neighborhood Growing Stable Market Rate Stagnant Market Vulnerable (Middle Neighborhoods) Threatened Neighborhoods Deteriorating, Subsidized Severely Distressed Critical Majority Vacant CLEVELAND MIDDLE NEIGHBORHOODS

What is a Middle Neighborhood? What is a Middle Neighborhood in Cleveland? How do we identify a Middle Neighborhood? How do we stabilize and grow Middle Neighborhoods? Next Steps CLEVELAND MIDDLE NEIGHBORHOODS

Regional Housing Market 350 Neighborhood Price Sq/ft (2019 Q4) 300 250 Middle Markets 200 150 100 50 0

Edge Communities 120 Neighborhood Price Sq/ft (2019 Q4) 100 80 60 40 20 0

Cleveland Neighborhood Demand Index – (14) Indicators to be used to define clusters Category Indicator Geography Time frame Housing sales and transfers Median arms-length sales of residential properties Block groups - County 2017-2019 $/SQFT2 (median) Block groups - County 2017-2019 Variation in median arms-length sales price of residential properties Block groups - County 2017-2019 Mortgage, tax, and BOR foreclosures on residential properties Block groups - County 2017-2019 Velocity of sales- how often properties turn over Block groups - County 2017-2019 Other housing attributes % probable rental, of residential properties Block groups - County 2017-2019 % vacant residential structures Block groups - County 2017-2019 % privately held rental properties with HCV, of residential Block groups - County 2017-2019 % subsidized housing/ project based section 8, of residential Block groups - County 2017-2019 % CMHA housing- housing estates owned by CMHA Block groups - County 2017-2019 Land use % Commercial (non- apartment) Block groups - County 2017-2019 % residential vacant land Block groups - County 2017-2019 Housing Demolitions Block groups - County 2017-2019 investment/interventions CLEVELAND Permits >$10k, new construction, and/or "rehab" permits Block groups - County 2017-2019 MIDDLE NEIGHBORHOODS

Neighborhood Demand Index (NDI) CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS

Potential Middle Neighborhood Targets CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS

Homes Sold Over $150K (Since 2014) Homes Sold Over $100K (Since 2014)

Homes Sold Between $60K - $100 Homes Sold Between $0.01 - $60K

CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND Middle Neighborhood Strategic Focus MIDDLE NEIGHBORHOODS

CLEVELAND Commercial Properties MIDDLE NEIGHBORHOODS

CLEVELAND No Canopy (<5%) MIDDLE NEIGHBORHOODS

Lee Harvard CLEVELAND MIDDLE NEIGHBORHOODS

Bellaire Puritas CLEVELAND MIDDLE NEIGHBORHOODS

What is a Middle Neighborhood? What is a Middle Neighborhood in Cleveland? How do we identify a Middle Neighborhood? How do we stabilize and grow Middle Neighborhoods? CLEVELAND MIDDLE NEIGHBORHOODS

Policy Examples Market Type Public Action Regional Choice Asset Promotion High Value Steady Asset Preservation Transitional Stressed Reclamation Asset Development CLEVELAND MIDDLE NEIGHBORHOODS

R Connecting Policy & Programs to Markets Regional A B C D E Steady Transitional Distressed Reclamation Strong Choice Demolition of Dangerous Properties Targeted scale Acquisition/Rehab Tree Plantings/Dead Tree Removal Land Assembly for Redevelopment Tax Abatement/Construction Subsidy Quality of Life Code Enforcement (HHI) Abandoned Car Removal Nuisance Abatement High Priority Medium Priority CLEVELAND Low Priority MIDDLE NEIGHBORHOODS Limited Activity

Tax Abatement Strategy CLEVELAND MIDDLE NEIGHBORHOODS

HousingNOLA (70 Neighborhoods – 5 Typologies) 2015 Market Value Study 459 Census blocks – 9 Market Clusters CLEVELAND MIDDLE NEIGHBORHOODS 4 1

Overlay Market Analysis with Housing Study 6 160 14 140 19 5 120 8 5 27 100 4 # of 23 13 4 Census 80 9 Blocks 37 29 60 1 7 25 44 5 40 21 24 20 29 11 29 23 6 12 2 7 5 2 0 1 Obsolete Distressed Limited Updates Renovation+ Modernized A B C D E1 E2 F G H CLEVELAND MIDDLE NEIGHBORHOODS 4 2

Comprehensive Middle Neighborhoods Tool-Kit Capital Access for Non- High LTV Loans Great Streets & Profits Infrastructure Acquisition Rehab Refi-Rehab Model-Block Investment Targeted Economic Development Construction Gap Storefront Renovation Subsidies and Commercial Public Services Beautification Tax Abatement/Credit CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS

CLEVELAND MIDDLE NEIGHBORHOODS

Challenge for Developers: Rehab and Construction Gap Sales Price $135,000 Acquisition REHAB PROFIT $10,000 $80,000 $45,000 Acquisition REHAB GAP $65,000 $80,000 $10,000 CLEVELAND MIDDLE NEIGHBORHOODS

Cycle of Decline Competition from Suburbs Decline in Neighborhood Decreased Appeal Demand Deferred Maintenance Stagnant Market Reduction in Homeownership Decline Property Values CLEVELAND MIDDLE NEIGHBORHOODS

Investors in the Middle MIDDLE MARKETS (NEO) EDGE MARKETS (CLE) For Profit Developers Non Profit Developers (Rehab and New Construction) Limited Income Homeowners New Homeowners LLC Investors LLC Investors CLEVELAND MIDDLE NEIGHBORHOODS