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Examination of Cleveland-area land bank shows hope for area properties

Land bank lets local authorities find new uses for troubled properties.

Georgine Welo, mayor of the Cleveland suburb of South Euclid, visits the Warrendale Community Garden. With the help of the Cuyahoga County Land Re-utilization Corp. the city was able to replace a derelict house with the garden.

Jan Underwood/Staff Photographer Georgine Welo, mayor of the Cleveland suburb of South Euclid, visits the Warrendale Community Garden. With the help of the Cuyahoga County Land Re-utilization Corp. the city was able to replace a derelict house with the garden.

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By Joanne Huist Smith, Staff Writer Updated 3:05 AM Sunday, July 10, 2011

Vacant and abandoned properties emerging from Ohio’s foreclosure meltdown threaten to overtake entire city neighborhoods and are creeping into once stable suburbs.

Last week, Montgomery County leaders took the first steps to create a land bank, with the authority to acquire abandoned properties, clear the titles of delinquent taxes and liens, then find new users who will make them tax producing again.

In the Cleveland area, Cuyahoga County was the first in Ohio to try this remedy two years ago.

Could it work in Montgomery County?

“This is a crisis of unprecedented proportions. Old tools don’t work,” said former Cuyahoga County Treasurer Jim Rokakis, now director of the Western Reserve Land Conservancy’s Thriving Communities Institute.

Cuyahoga County won legislative approval to launch the state’s first land bank in 2009. A handful of counties — Lucas, Mahoning, Trumbull — with populations of at least 60,000 have followed suit since the General Assembly expanded land banking authority in 2010. Montgomery and Hamilton counties are the latest to join the movement.

“I think there are probably thousands of these structures in the county,” Montgomery County Treasurer Carolyn Rice said. “My intent is to drive this conservatively, but smart. We want to get the land into the hands of responsible, stable people.”

Cuyahoga County land bank backers say they are turning eyesores into eye-catching properties. Now that Montgomery County has taken the first step toward establishing a land bank, the Dayton Daily News decided to go to Cleveland to see whether it is making a difference in some of the state’s most depressed neighborhoods.

‘Land bank  on steroids’

The Cuyahoga County Land Reutilization Corp. is funded through millions of dollars in penalties and fees from delinquent property tax bills. The president, Gus Frangos, has called it a “land bank on steroids.”

“The world was coming to an end and going slow was not going to work for us,” said Frangos, estimating the county had 30,000 vacant or abandoned structures.

The land bank began negotiating agreements almost immediately.

• A December 2009 agreement with Fannie Mae — a government-sponsored corporation that purchases mortgages from banks and resells them to investors — enabled the land bank to buy foreclosed homes for $1 each. Fannie Mae pays $3,500 toward the demolition costs for each home.

• August 2010, the U. S. Department of Housing and Urban Development agreed to sell low-value ($20,000 or less) properties to the land bank for $100 each, instead of putting them up for auction for possible sale to house flippers or speculators. As part of the deal, the land bank also may buy homes valued between $20,001 and $100,000 at a 30 percent discount before the properties are offered to the public. If the houses go on the market and don’t sell within 60 days, the land bank can purchase them at a 50 percent discount.

• In June, Wells Fargo began donating vacant land and foreclosed, low-value properties to the land bank along with a contribution of $3,500 to $7,500 toward demolition. Bank of America struck a similar deal to donate up to 100 vacant properties and assisting with demolition costs.

“These are agreements that should be in play fairly quickly in Montgomery County,” Rokakis said.

The Cuyahoga County land bank hasn’t magically transformed neighborhoods. It is not a quick cure or a cure all, but residents and community leaders say it is helping jurisdictions make noticeable improvements.

“This is not a short-term process. You’re not going to fix it overnight, but you will see progress over time,” Rokakis said.

A 2010 study by Neighborhood Progress Inc. tallied more than 13,000 vacant houses in the city of Cleveland alone, up from the 11,500 counted in a Case Western Reserve University study the previous year.

In all, the land bank has acquired about 1,240 properties since November 2009. Of those, 490 have been demolished or are under contract for demolition and 96 have been rehabbed and sold.

Ultimately, it’s cities and townships where a property is located that decide the end use, not the land bank. Some are being held for strategic assembly and economic development. Urban search-and-rescue teams are using collapsed homes held by the land bank for training, prior to demolition. Lots have been deeded to churches and schools for parking lots and playgrounds, and some have gone to neighboring property owners.

And, around the county, flower and vegetable gardens are blooming on land-bank acquired property that once held dilapidated housing.

“We’re not just growing fruits and vegetables here,” city of South Euclid Mayor Georgine Welo said. “We’re growing a community.”

The goal, Frangos said, is to move properties in and out of the land bank as quickly as possible.

“We don’t want to hold properties. That can be costly, about $3,000 to $3,500 a year. If my folks are humming, from the time we get the property to demolition, it’s three months,” Frangos said.

Of the 59 municipalities in Cuyahoga County, 30 have land banks, which can hold properties tax free until a new use is identified.

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