Thursday, October 22, 2009

The "Big Picture" of Cincinnati Demolition Policy, Part 3

Last time we looked at the devastating financial effects that demolition puts on our County Tax base, and how reduction in that base caused by demolition threatens to ultimately result in raises in property tax rates or increases in special Levy's to cover operating costs of various projects.

In this part we will look at the history of the cause the decline of Cincinnati Urban Neighborhoods that fostered the "Blight=Bulldozer" mentality of our city government and leaders.

In looking at one of the "causes' of neighborhood decline, sometimes it isn't 'politically correct' to state some of the "real reasons" for community decline but in order to understand the problem we have to look at the underlying reasons that got us there. Cincinnati is not unlike other cities in some of these respects, but how we handled the problem led to much of the reason we are why we are where we are at.

For years Cincinnati , just like every other major American city dealt with the issue of low income housing in pretty much the same manner. We built housing projects. Completed in the 1930s and 1940s, the Laurel Homes and Lincoln Court projects were built by the Cincinnati Metropolitan Housing Authority under the New Deal housing programs, initially for defense workers and their families. But eventually transitioned into what we called "public housing". It was the second largest Public Works Administration public housing project in the country

The Cincinnati housing projects were torn down under HUD’s Home ownership and Opportunity for People Everywhere VI (HOPE VI) program, passed in 1992. Initially billed as a measure to “revitalize severely distressed public housing,” HOPE VI was turned primarily into a demolition program. In the mid-90s Congress repealed the one-for-one replacement requirement, whereby every public housing unit demolished had to be replaced, and HUD, led by Clinton appointee Andrew Cuomo, son of the former New York governor, embarked on a program to demolish 100,000 public housing units by 2000. In Chicago alone, 40,000 units were destroyed.
According to HUD, the HOPE VI program is designed to reduce concentrations of poverty and African Americans, by encouraging a greater income mix in public housing projects and nearby neighborhoods.

Housing advocates will point out, HUD’s efforts to de-concentrate poverty did not translate into de-concentrating wealth, i.e., building affordable housing in wealthy neighborhoods, did not generally happen. In the affluent suburbs that surround Cincinnati, for example, real estate developers, politicians and well-to-do homeowners used “exclusionary zoning” to prevent the building of apartments and smaller, affordable homes, thereby excluding the poor and minorities and keeping property values high. NIMBY( Not in my back Yard) meant that existing working and middle class neighborhoods would take the poor.

Federal housing assistance programs began during the Great Depression to address the country’s housing crisis. caused by those out of work flocking to major American cities looking for work.

In the 1960s and 1970s, the federal government created subsidy programs to increase the production of low-income housing and to help families pay their rent,Congress passed the Housing & Community Development Act of 1974, which amended the U.S. Housing Act of 1937 to create the Section 8 Program. In the Section 8 Program, tenants pay about 30 percent of their income for rent, while the rest of the rent is paid with federal money.

Over the years the demolition of public housing and the expansion of Section 8 resulted in the 'emptying out' of the 'projects' and relocation of those people to the to the mostly western areas of town like Price Hill, Fairmount and Westwood. As well as the Northside, Mt Auburn, Walnut Hills. and parts of Avondale.

One can argue the merits of the Section 8 program in Cincinnati and the way certain areas seemed to be "targeted' but the facts are that the changes in public housing and Section 8 happened about the same time as greater expansion of suburban areas. Also many 'long term' residents of these areas who were working and middle class who bought in these areas after
WW2 were dying off. The children of these family members were attracted to the "new shiny suburbs' and prices in those neighborhoods were still substantial allowing them the ability to move to the "far burbs". Cincinnati retracted again population wise as Urban Sprawl took over and people moved farther and farther out.

If one looks at the "Market Value History' of housing in the auditors records for areas like Fairmount, Price Hill and Westwood and if you recall one of the houses we talked about yesterday on Tremont that is set for nuisance hearing, houses in Fairmount as late as the early 2000's were typically selling in the 50-80,000.00 range. Those were the typical home prices in the area because there was still significant owner occupancy, and most of the Mixed-use buildings were still owner occupied or the owner lived in the same neighborhood, they were in. These were still "neighborhoods" of people who knew each other, and had common history.Until the "projects' were emptied out, these were considered safe, clean desirable neighborhoods. The "average market price" in South Fairmount has gone from the 70K range down to 10-12K and it is not at all unusual for houses (mostly foreclosures) to sell for as little as 3-4,000.00 dollars. This has resulted in the loss of MILLIONS of market value in these neighborhoods, huge loss in the city's property tax base and fostered an attitude among certain city officials that "No one would want to live there". Never mind that these Urban areas contain architecturally, some of the finest housing in the city that, despite being mistreated over the last decade, are still very restorable and close to the downtown business center.

When those who were in "housing projects" were suddenly displaced and moved into unfamiliar
neighborhoods there were no programs to assist them with transition. What was 'acceptable' in the housing project, where grounds were taken care of by the government, these types of services were non existent in section 8, nor was section 8 really a transition program to home ownership. Many landlords who were originally attracted to the Section 8 program did so because of the 'guaranteed rents' but they were not equipped to handle the higher maintenance costs created by people who didn't care where they lived or actually resented being 'forced out' of the projects were where they had grown up with family and friends.

There was significant lack of maintenance and older properties which had been well maintained by owner occupants for decades, quickly declined under "absentee landlords" who suddenly found themselves with major monies to expend to maintain these homes. Many left the Section 8 program but were "stuck' with homes that couldn't be certified again for Section 8 without huge expenditures. The owner occupant residents who were still left had seen their property values plummet in less than 5 years. Many houses sat vacant and a new kind of landlord came into the picture.

These buyers were attracted by cheap readily available subprime mortgages and super low real estate prices in those areas. In the early 2002-2004 this gave rise to a new kind of owner.The out of state "investor types' and local slumlords who thanks to subprime lending could expand their property portfolios. These owners were interested in only one thing Buy cheap and "milk' the property for whatever you could get. When that was done, simply walk away. Tenants were not screened and many with criminal backgrounds moved in giving rise to spikes in violent crime and drugs.

This led us to 2007-09 and the latest foreclosure glut that hit these neighborhoods and now many urban neighborhoods are seeing a new kind of buyer, the "New Urbanists" who now represent maybe 20 percent of home sales in these areas . The New Urbanists are a combination of basically 3 groups, some are "20 somethings" for whom close proximity to downtown area is key. These are the people who grew up in suburbia and have no intention of living the way their parents did. The second group are Empty Nestor's who see opportunity in many of the small homes in these areas as the right size homes of their time in life, they have money and can well afford the cost of restoration but do not want to pay the high prices in "premium areas" like Mt Adams or Columbia Tusculum because they want a substantial cushion for retirement. The third group are Historic Preservationists and Old House Enthusiasts, some who have already restored in areas like Clifton and Mt Adams and are looking for their "next neighborhood' to transform. Many are from out of state who realize the real value in Cincinnati's Historic Architecture and see the opportunity to buy their 'dream house' for pennies on the dollar of what they would have paid back in their old state.

The problem with our current city government, and its not just a Cincinnati thing, is that city governments are slow to see trends and be able to react to them. The city is still pursuing
a "reactionary model" to the way things were 5-7 years ago. They do not see the "new money"
moving into these urban neighborhoods and wont see it until 2010 census numbers come in and population and people with household incomes in the 6 figure range start showing up in places like Fairmont and Price Hill.

Another part of the problem is also fostered by some community council leaders who are also slow to see changes in neighborhood and are still asking for demolition monies to be spent in their neighborhoods.

While there will likely still be battles with the out of state Investor type/slumlord contingent
over the next few years, there appears to be 'seed change' in the way many now look at Urban neighborhoods and the city needs to adjust current policies and stop treating "Minor problems" like gutters or porch railings, with the "Major surgery" of demolition. The 'well monied, well educated, New Urbanists are able to organize and to fight the slumlords but need city cooperation, not obstacles of having to fight the city government to save properties that they see as "opportunities in the rebirth" of these Urban Neighborhoods. They are also willing to invest in these neighborhoods and attract others to them.

Next time: How other cities are proactive and 'get tough' with problem property owners. Soluntions we can learn from.


fordmw said...

This is all very interesting and eye opening. Thx for posting.

Have never thought about buy-and-rehab here in Cincy, but you're helping me see the possibilities.


Paul Wilham said...

Matt, I get a couple of emails a week from people who have recently moved to Cincinnati from out of state and are restoring old houses and discovered my blog.

Right now I am working with 4 different people from four different states who are activly looking for historic houses to move into and restore. Cincinnati is a "bargain' compared to just about anyplace in the country.

I am also working on a book about Cincinnati Second Empire Architecture that should be out next year in national distribution.

This city could resolve much of its vacant building problem and its declining tax base by activly promoting Cincinnati nationally as a historic destination. Many old house people have jobs that allow them to live anywhere in the country. Yet few know about the rich architectural "finds" that are here and the "bargain basement' prices!

There is no reason why Cincinnati could not be a Chaleston SC, Savanah GA, New Orleans or San Francisco, all cities that employ thousands in the historic tourism industry and generate millions of dollars for the local economy.

fordmw said...

Paul, I love older home but I don't know anything about reno. I currently live in a 1920s Hyde Park brick. But prices of many of these indeed do seem 'bargain basement.'

Love the idea of Cincy as a historic destination. As it relates to residential, seems a 'critical mass' of restorations needed for this to coalesce.

Thx again for posting as I'm finding I'm more interested in this area than I previously thought.

Looking forward to the book too...


D R E W said...

we need new people to move in the city for various reasons. and we need to save our mass amounts of historic architecture.

seems like we should be able to attract new people to the city by luring them with this architecture.

the city gets fresh ideas and perspectives from the new people arriving, and the architecture is renovated and saved.

seems like a win-win to me.

any way to start a grassroots movement to get this started? obviously, the city isn't going to do it.

Paul Wilham said...

Drew I think what must happen is the Prservation Community, who knows the architecture and the Business Community who knows the marketing side need to join forces.

You need what amounts to an educational and advertising campaign to market the city nationally.

In an upcoming blog post (maybe next week somnetime ) I will talk about how corporations have "adopted' historic neighborhoods and developed incentive programs for employees to buy there.

That approach could work here too.

D R E W said...

how do we get that ball rolling?

native cincinnatians can't see past their own noses. so i can't see anyone coming up with this idea on their own unless we bring it up somehow.