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Mortgage

Ohio Congressional District attempts neighborhood restoration

Congresswoman Marcia Fudge, D-Ohio, introduced legislation to help states and cities enact a speedier, more efficient, process for abolishing vacant and abandoned properties.

The Restore our Neighborhoods Act of 2013 (H.R. 656) was jointly introduced by Fudge, Congressman Dave Joyce, R-Ohio, and Congresswoman Marcy Kaptur, D-Ohio, during a news conference in Cleveland.

The bill is a successor to a previous bill introduced in 2012 by Fudge, which did not reach a vote in the House, prompting its reintroduction.

The Restore our Neighborhoods Act is expected to provide a strong, sensible and cost-effective tool to meet the immediate need of rebuilding Ohio’s distressed neighborhoods. 

“The sheer volume of foreclosed and abandoned properties continues to lower property values in neighborhoods across the nation.  These blighted structures invite crime and negatively impact the quality of life for residents who work hard to maintain their homes,” Congresswoman Fudge said. 

Nonseasonal vacant properties have increased 51% nationally from nearly 7 million in 2000 to 10 million in 2010, with 10 states seeing increases of 70% or more, according to the U.S. Census Bureau

A recent study on the impact of sales prices tied to vacant, tax-delinquent and foreclosed properties in Cuyahoga County, Ohio between April 2010 and March 2011 concluded that a vacant property within 500 feet of another property reduces that property’s price by 0.7%, according to the Government Accountability Office.

Additionally, the same study estimated the loss to home sellers attributable to nearby foreclosed, vacant or tax-delinquent properties is $76 million.

Congresswoman Fudge said the solution to this problem is demolition. Demolishing vacant blight properties will create “green space and vacant land that can be used for economic development.” 

Similarly, President and General Counsel Gus Frangos for the Cuyahoga County Land Bank told Housingwire that funding for needed demolition in hard hit areas is critically needed.

“Vacant, abandoned and blighted homes are a danger to the surrounding community and diminish the tax base,” Frangos said. 

He added, “A critical mass of funding is necessary to provide a strategic intervention in these neighborhoods which includes needed and targeted demolition, rehabilitation, and preservation of the community’s heritage.” 

The Restore Our Neighborhoods Act carries many benefits, including permitting the U.S. Treasury to allocate bonds to states for an eventual sale to investors.

Additionally, the bill will allow proceeds from the sales to be used by land banks for demolition purposes and states without land banks will be able to participate, respectively.

Furthermore, the bill will allow states to use up to 100% of Hardest Hit Funds for demolition. Currently, the fund cannot be used for this purpose. The legislation also imposes a requirement that states spend all of the HHF funds within two years of enactment, or 25% of the fund will be returned to the Treasury. 

Given an average demolition cost of $7,500, demolishing 2,000 homes that are foreclosed or vacant would net $12 million in value, benefiting sellers of nearby homes and the Cuyahoga County’s real property tax base, according to GAO.

“Communities in the 11th Congressional district, including Cleveland and Akron, have been hit hard by the foreclosure crisis and Ohio remains one of the hardest hit states,” Fudge said.

The Congresswoman added, “I am grateful to my colleagues, Congressman Joyce and Congresswoman Kaptur for joining with me in introducing this bi-partisan measure that provides resources for demolition to all 50 states.” 

cmlynski@housingwire.com

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