More money coming to Butler County to demolish blighted buildings

The Ohio Housing Finance Agency (OHFA) today announced the recipients of additional funding under the Neighborhood Initiative Program (NIP), a program designed to help prevent foreclosures and stabilize local property values through the demolition and greening of vacant and blighted homes across the state.

The OHFA received $191 million and just over $100 million of that was allocated to 18 counties in the fifth round of the Hardest Hit Fund Program. Butler County had originally asked for $3 million but land bank Executive Director Mike McNamara said he is pleased to get any funding he can.

Holly Swisher, NIP manager, said the demand — requests totalled 203 million — for the Hardest Hit Funds far exceeded the supply.

“The dollar amount we had available to allocate, the requests were more than double that,” she said. “We looked at how much each land bank had already spent of their current allocation to determine the allocation amounts for this round.”

U.S. Sen. Sherrod Brown pushed for and succeeded in securing a $2 billion in federal funds to bolster Hardest Hit funds in December.

“Ohio communities and homeowners are still recovering from the foreclosure crisis that devastated our country,” said Brown, ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. “Foreclosed or abandoned homes can hurt home values in our neighborhoods and contribute to crime. This funding will allow Ohio communities to prevent foreclosure and get rid of blighted properties in our state.”

A new study the land bank initiated shows investing in blight eradication is working. The study shows it has had a positive influence on property values in Hamilton and foreclosures in Middletown.

Last fall, land bank McNamara sought the help of Miami University students in the Center for Analytics & Data Science, to try to determine whether bringing down blight is achieving the goal of stabilizing neighborhoods.

The students found property values of homes within a 500-foot radius of a downed eyesore increased 29.65 percent in Hamilton but a “statistically insignificant” amount in Middletown.

Meanwhile, banishing blight in Middletown had a positive effect on foreclosures but the results were not true for Hamilton.

“Interestingly, in Middletown, there is a strong association between blight removal and foreclosures,” the students wrote. “Such that proximity to a demolished property is associated with a significant reduction in the likelihood of foreclosure when comparing similar properties.”

With $2.7 million it received in Moving Ohio Forward grants from the state, Butler County formed a land bank three years ago to deal with blighted buildings. The cities of Hamilton and Middletown each gave $1.1 million to the land bank fund, as well. Approximately 600 blighted buildings have been torn down through the land bank program.

Butler County commissioners agreed two years ago to siphon 1 percent of delinquent tax and assessment collection funds (DTAC) to bolster the land bank and open up services for the entire county. DTAC funds are late payment penalties on real estate taxes. The 1 percent garners about $130,000.

With that new funding source the land bank was able to qualify for $2 million more from the Hardest Hit Fund program through the federal government.

McNamara got the idea for studying the effects of blight removal from the land bank in Cuyahoga County. It released a study that showed in moderate to high-functioning markets the benefit to banishing blight ranged from $4.27 to $13.45 per dollar invested in demolishing bad buildings.

He said the fact the students didn’t find increased property values in Middletown doesn’t mean the land bank hasn’t been successful.

“There is a positive correlation on property values to areas where the land bank has been active,” he said. “I think that’s a bigger win than what the report kind of leans on, because the students didn’t understand that these are areas we are attacking where there are declining property values. So if we were able to simply neutralize the decline in property values (that) would, in my opinion, be a win.”

As for the foreclosure differential between the two cities, he said the results are very understandable, given the methods each of the cities are using to tackle their eyesores. Hamilton has made heavy use of the expedited foreclosure method of obtaining properties but Middletown has used it only sparingly, according to McNamara. Thus, there are just more foreclosures in Hamilton.

In Hamilton approximately 45 properties where blight was banished have been re-purposed. The city demolished a blighted property on Hanover Street adjacent to St. Joseph Catholic Church so the church could add more parking, they banished a brothel/drug house that was next to a playground and a Habitat for Humanity house rose up in the 300 block of 10th Street.

Kathy Dudley, an attorney for the city of Hamilton who handles land bank business, said they have put re-purposing on hold while they evaluate “strategic uses” for all of the properties. She agreed with McNamara that the housing value issue goes deeper.

“There are many reasons why values rise in one city more than another,” Dudley said. “I am not sure the study addresses those other issues. While the cities differ in their approach, I believe it would be premature to make the conclusion it is solely the re-purposing difference. The scope of the problem in each city, location of the demos, and many other factors would impact that value.

“Middletown’s stopping of the decline in home values could itself be significant as it helps other property owners maintain the values of their homes and it helps to keep the tax base from shrinking. I think this study gives us an excellent base line with which to work to evaluate that issue over time by analyzing additional data in the future.”

Middletown City Manager Doug Adkins said they are also in the process of studying their housing stock. He said re-purposing properties was never on the city’s agenda.

“For Middletown to date, that really hasn’t been the purpose,” Adkins said. “For us, it was removing blight and removing housing that was no longer viable and competitive from our housing stock.

“At the height of the recession, Middletown had over 3,000 vacant residential housing units. We had hundreds of houses in Middletown during the foreclosure crisis that became so run down through neglect, abandonment or deferred maintenance, that the cost of putting them back together made no commercial sense to a homeowner or landlord. There’s usually no reason to spend $35,000 to repair a $50,000 house back to code. The math simply doesn’t work.”

The students, who worked a total 465 “man hours” for free, acknowledged since the land bank has only been beating back blight since 2013 the study should be repeated.

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