Thursday, July 11, 2013

Group hopes to slow state-funded demolitions, put properties in rehabber's hands

A group of a dozen preservation-minded Cincinnatians met Monday evening in the ‎MOTR Pub's Sword Room in Over-the-Rhine to try to slow what they feel is a program that lacks transparency and is actually doing more harm than good in many City neighborhoods.

At issue is the Moving Ohio Forward program, created last year by Ohio Attorney General Mike DeWine's office following a $25 billion settlement between the states and five of the nation's largest servicers regarding foreclosure abuses, fraud, and deceptive practices. Of the $330 million allocated to the state, $75 million was directed into the program to demolish abandoned, vacant, and blighted residential structures.

While other states have chosen to use at least a portion of the settlement for preservation and rehabilitation of important buildings, Ohio has designated all of the money for blight abatement through demolition.

"That may be good for Youngstown, or Akron, but every City's different, and all of their needs are different," said Christian Huelsman, co-founder of Spring in Our Steps and part of the City's Office of Environmental Quality.

Hamilton County was allocated $5.84 million, with the Hamilton County Land Reutilization Corporation providing $5.34 million in matching funds. The City will receive $3.49 million and is providing an equal amount in matching funds.

The City has set a goal of demolishing 600 residential buildings by the end of this year, which represents approximately one-quarter of the City's stock of more than 2,400 abandoned and vacant properties.

A November 2012 presentation outlining the program for City Council's Budget and Finance Committee cited a September 2012 research paperby Alan Mallach of the Brookings Institute's Metropolitan Policy Program, which claimed that Cincinnati would have to demolish approximately 6,500 residential structures within the next five years – a feat that would cost, by conservative estimates, $63 million.

An action plan

Specifically, the group is in the process of containing a list of the buildings scheduled to be demolished and the rationale behind their inclusion. Then, it wants to prioritize which buildings are the best candidates to save and work on putting together a full damage and repair assessment for each.

With those estimates, the buildings could be advertised to interested developers.

"If you don't have these numbers, you're not going to find somebody to buy this building," said Cody Rush-Ossenbeck, owner of Nazca Restoration, who has worked extensively in Over-the-Rhine.

Neighborhoods have been involved in the process, with community councils and community development corporations having lists of targeted properties and having the ability to communicate directly with the City if they have any issues.

But Huelsman said that there are many stakeholders in the neighborhoods who have the resources to save these buildings, but they have no idea that the opportunity exists.

"This also affects the property values of property owners who are adjacent to the property," he said.

A demand that doesn't exist

In theory, the program is meant to eliminate neighborhood blight and open up properties for redevelopment or for a "side lot" initiative that allows adjacent property owners to acquire vacant lots to expand their yards. Some properties go to sheriff's sale.

But Huelsman points out that vacant lots can remain vacant for years, even decades. And many of them will never be feasible for redevelopment due to their small size, or the lack of return on investment available due to their surrounding property values – essentially razing properties to meet a demand for infill that doesn't exist.

That results in a net loss to the City's tax base. Huelsman estimates that if all of the buildings scheduled to be demolished were redeveloped, it would result in an additional $250,000 to $500,000 in tax revenue for the City.

In other places, blocks can, over time, lose so many buildings that it becomes perfectly acceptable to raze the remainder of the block for larger, incompatible developments.

According to Rush-Ossenbeck, much of the City's value lies in its impressive contiguous stretches of old architecture. While one building may have a certain value, the real value is a collective one.

"The value is that it has an intact streetscape, and it has that feel," he said. "So many cities have lost that."

A leg up

For those who might be interested in taking on the challenge, the group kicked around the idea of beginning a mentoring program to help them navigate what can be a confusing financing, planning, and permitting process.

"It's not designed for people who want to buy and rehab a house, it's designed for people like me who do this for a living," Rush-Ossenbeck said.

Mentors would be able to steer prospective rehabbers and owner occupants toward little-know programs like the Federal Housing Administration's 203(k) mortgage program, which is available for the acquisition and rehabilitation of residential structures of one to four units. The mortgage is based upon the projected value of the property when fully renovated, and takes into account the cost of the work.

"It's a great leg up, it's a way to get started," Rush-Ossenbeck said. "That's the kind of people we want to get involved. It's a very fantastic opportunity, but nobody knows about it.

Buildings can be taken off of the Moving Ohio Forward list. On several occasions, buildings have been removed by having a prospective buyer or owner submit a plan for the building's stabilization and prove their capacity to do so; still others had been placed on the list by mistake.

Previous reading on BC:
Capacity, funding could hurt demolition initiative (9/25/12)
Hamilton County land bank has new blog, better info (7/16/12)
Cincinnati council supports land banking (6/28/10)
Ohio land bank bill now law (4/8/10)
Cincinnati RoundTable focuses on land banking, housing court (3/31/10)