The Ohio Housing Finance Agency announced last Friday that 11 counties and cities would receive $49.5 million to stabilize neighborhoods through demolition of blighted properties. The OHFA administers the Hardest Hit Funds, which is a federal foreclosure prevention initiative.
As expected, Cuyahoga County will receive the largest amount of cash at $10.1 million. Our community was one of the hardest hit counties in the nation and served as ground zero of the national mortgage meltdown. Both the city of Cleveland and inner-ring suburbs continue to be plagued by the thousands of vacant and abandoned properties. These blighted properties turn into drug houses and havens for other criminal behavior. Cities lose precious tax dollars and the cost of general maintenance and upkeep is staggering.
Many of these vacant homes that fall into foreclosure were the result of Mortgage Fraud and predatory lending. As a result of the County’s Mortgage Fraud Task Force, hundreds of individuals were convicted of crimes and millions of dollars were recovered in forfeiture fees. Many of the predatory loans made by now-defunct sub-prime lenders resulted in thousands of individuals losing properties to foreclosures and short sales. Many homeowners just walked away from their homes when they were so far under water on their mortgage there was no way out.
The estimated cost of a demolition is $12,000 according to Frank Ford, Senior Policy Advisor at the Thriving Communities Institute at the Western Reserve Land Conservancy. Thus, the $10.1 million allocation from OHFA can expect to raze 841 blighted/abandoned properties. This will put but a dent in the 12,000-15,000 distressed properties that need to be razed within the county. To cover this shortfall County Executive Fitzgerald will be initiating a $50 million county bond program to demolish these properties. Details for this bond program and there issuance will be provided to County Council for their approval.
A recent study, which was funded by the Thriving Communities Institute with help from Attorney General Dewine and Cleveland City Council, revealed that strategic demolition of these abandoned properties can stabilize a neighborhood, increase property values on the street and the surrounding streets, decrease foreclosures and lessen tax delinquencies. This study persuaded the Treasury Department to free up the Hardest Hit Funds for other foreclosure prevention strategies such as demolition. According to OHFA, a second round of allocations for the remaining $11.5 million will take place in the summer.
Additionally there is in the works legislation introduced by Marcia Fudge, Marcy Kaptur and Dave Joyce (all representatives of Northeast Ohio) that would permanently allocate Hardest Hit Funds for strategic demolition nationwide.