The Mount Pleasant neighborhood on Cleveland’s southeast sideis like many urban areas afflicted by the foreclosure crisis: It’s struggling, but it has strong community groups, and it’s close to the upscale suburb Shaker Heights. Mount Pleasant, as a whole, can recover.
Then there are streets like East 144th Street.
East 144th, in the middle of Mount Pleasant, is about half a mile long. It is a stretch of mostly vacant, boarded-up properties, some damaged by fire, interspersed with remaining residents who are trapped. There are no buyers for houses on this street. Not now. One “For Sale” sign offers a boarded-up home for $99. City Council member Zachary Reed tells me that 10 years ago, there wasn’t a single vacant structure on East 144th.
The foreclosure crisis changed that. Almost every empty home on East 144th has been vandalized, with everything of value stripped from them. Internet-savvy thieves scour the eviction rolls on sheriff and court Web sites, poised to steal a property’s valuable items, often within hours of it being vacated. These houses are extensively damaged. And they make it nearly impossible to rehabilitate a Mount Pleasant home. “This street is killing a neighborhood we can save,” Reed told me.
Thousands of vacant, abandoned, functionally obsolete and vandalized properties are choking the life out of foreclosure-wracked places such as Mount Pleasant. The answer isn’t to scrape together money to try to fix these homes. The solution is to tear them down. Only a thoughtful and large-scale demolition program can save what’s left. Only the elimination of worthless housing can allow cities to reposition their neighborhoods for rebirth.
Government leaders are beginning to understand that. This past week, federal and state officials announced a $25 billion settlement with five banks over fraudulent foreclosure practices. Ohio Attorney General Mike DeWine saidhe would set aside $75 million of the state’s portion of the settlement for demolition in distressed communities. Because there is a direct link between bad mortgages and abandoned properties, it is fitting that a portion of that money be used to stabilize neighborhoods for those who are left.
More than 100,000 homes in Ohio are abandoned and face demolition, according to the attorney general. Officials in Michigan told me they estimate that at least 75,000 homes in their state could be torn down. But is not just a Rust Belt problem. Former Chicago building commissioner Rich Monocchio puts the number of vacant properties in that city at 18,000, with at least a third needing immediate demolition. Michael Braverman, the deputy commissioner of building in Baltimore, puts the number awaiting demolition there at 10,000 units.
The task in Baltimore — and in other cities with rowhouses, such as Washington — can be prohibitively expensive. Rowhouse units cannot be demolished until the side walls are given additional support, so it can cost roughly $60,000, more than six times the cost of tearing down free-standing homes in Cleveland or Detroit.
Local governments are responsible for removing or maintaining these properties. And they are overwhelmed by the size of the crisis. The increased pressures caused by mass vacancy — more building-inspector and fire department visits, policing half-empty neighborhoods, keeping lawns mowed and properties secure — are more than local governments are equipped to handle.
And, with the foreclosure crisis still raging, houses are being abandoned at a faster rate than cities can tear them down. A recent Government Accountability Office study shows that cities across America each spend millions of dollars a year trying to keep vacancies from sinking into blight. Detroit, teetering on insolvency, spent $1.4 million over 18 months just to board up houses. Baltimore spends $2 million a year to board up abandoned homes and mow lawns. The GAO acknowledged that it is impossible to tell how much the vacancy crisis is costingcities in overall increased spending and lost revenue, but said that the sums are crippling local governments.
In many cases, local leaders understand that demolition is part of the answer, but they don’t have the resources to pursue it. The federal government’s Neighborhood Stabilization Program, intended to help communities with high foreclosure and abandonment rates, provides some limited funding for demolition. But its focus is on rehabilitation.
Part of the problem is that by the time a city or town is facing an abandonment crisis that calls for demolition, it doesn’t have the resources to deal with it. People often abandon homes when property values collapse, if they are underwater on their mortgages and see no advantage to sticking it out. In turn, the more abandoned properties in an area, the lower property values sink.
In Montgomery County, Ohio, where the city of Dayton has been devastated by foreclosure and abandonment, property values have taken a $2 billion hit since 2008, costing local governments and schools more than $40 million annually.
Things look even worse for Cleveland and Cuyahoga County next year.A December report from the Federal Reserve Bank of Cleveland projects an 11 to 18 percent overall decline in property values countywide, with declines of 38 percent to 45 percent in Cleveland and 26 percent to 30 percent in the city’s inner-ring suburbs.
According to the Cleveland Fed, the average home in Cleveland is on the market for 954 days before it is sold — almost three years. On the city’s East Side, houses now sell for roughly 10 percent of the assessed value.
With abandonment comes crime. Vacant structures provide a convenient hiding place. Ask any police officer who patrols these neighborhoods how vacant properties put them at risk. But you can no longer ask officer Derek Owens of the Cleveland Police Department. He was shot and killed by an assailant who was loitering on a vacant property on the East Side. You can ask Jack Reall, head of the firefighters union in Columbus. He said that when firefighters battle blazes at vacant properties, they are endangered by holes that thieves have cut in the floor to get to the ductwork, which they tear out to sell as scrap metal.
For many Americans, the notion of demolishing homes is shocking, especially in an era when so many people lack housing. Federal policy also is seemingly at odds with strategic demolition and is stuck in a bygone era of growth and strength in the housing market. Federal programs such as the Neighborhood Stabilization Program and the Obama administration’s proposed Project Rebuild don’t allow federal housing funds to be used mainly for demolition.
In cities with a strong real estate market, the argument that houses should be fixed up and mothballed until the market recovers may be persuasive. But in weak-market cities such as Cleveland and Detroit, or in the high-vacancy areas of Chicago or Baltimore, demolition is the best and most sensible solution.
Demolition can stabilize communities by removing blight and increasing property values. In Flint, Mich., the Genesee County Land Bank strategically concentrated $3.5 million of demolition on the city’s north side. Michigan State University researchers found that, within five years of these demolitions, the aggregate property valuation in the area had increased by more than $112 million.
“There is no doubt that demolition, when used strategically, can make a difference in neighborhoods that still have a fighting chance,” said Dan Kildee, a former treasurerof Genesee County and now director of the Center for Community Progress.
Rep. Steve LaTourette (R-Ohio) is drafting a bill that would help cities and states finance demolition projects like the one in Flint. Under his proposal, the federal government would cover local communities’ borrowing costs for demolition and clearance programs. The communities, in turn, would be given broad discretion on how to finance the demolition. Some would seek state support, others would self-finance, and others could seek philanthropic or private-sector participation.
Cities devastated by foreclosure and abandonment face a long recovery. But urban land cleared by demolition is beginning to offer communities some hope. Often the land is simply absorbed by the adjoining homeowner, sometimes for a nominal fee, for side-yard expansions, immediately adding to the viability — and value — of that enlarged property.
Sometimes, newly cleared land can be a place for community gardens or urban farming projects. That’s what’s happening in Cleveland’s Kinsman neighborhood, where the Cleveland Foundation is sponsoring a multimillion-dollargreenhouse project that will employ roughly 40 people. Michigan puts cleared land into special tax districts to spur redevelopment.
Reed, the Cleveland council member, showed me how cleared land at the end of East 144th has spurred new investment in Mount Pleasant. A business owner is remodeling a storefront for a beauty salon — because it will now have off-street parking. On the other corner, a fraternal lodge has purchased a closed mosque and is moving its headquarters there while turning the surrounding cleared properties into a neighborhood park.
All it took to build things up again was to knock a few things down.
Jim Rokakis is the director of the Thriving Communities Institute of Western Reserve Land Conservancy and a former treasurer of Cuyahoga County, Ohio.