CLEVELAND MIDDLE NEIGHBORHOODS
Strategies to stabilize CLEVELAND MIDDLE NEIGHBORHOODS Middle Neighborhoods Field Jason Powers, Project Director Cleveland Middle Neighborhoods Initiative
Alan Mallach, Senior Fellow Center for Community Progress
Paul Brophy, Principal Brophy & Reilly, LLC
Charles Buki, Principal czb LLC
PARTNER/PEER CITIES:
Rochester, NY Baltimore, MD Erie, PA Detroit, MI Buffalo, NY Chicago, IL Plano, TX Akron, OH Pittsburgh, PA Des Moines, IA CLEVELAND MIDDLE NEIGHBORHOODS Presentation Agenda
. What is a Middle Neighborhood?
. What is a Middle Neighborhood in Cleveland?
. How do we identify a Middle Neighborhood?
. How do we stabilize and grow Middle Neighborhoods; develop policies?
CLEVELAND MIDDLE NEIGHBORHOODS Baseline Understandings & Strategies
• Public subsidy is scarce & subsidies alone cannot create a market
• We must create conditions for investment to occur and leverage that private investment
• In distressed markets, build from strength by investing near strong assets
CLEVELAND MIDDLE NEIGHBORHOODS Baseline Understandings & Strategies
• With limited resources we must concentrate efforts in places where we can see the greatest impact.
• The best decisions are based on the sound and objective analysis of quantitative and qualitative data
CLEVELAND MIDDLE NEIGHBORHOODS What is a Middle Neighborhood?
What is a Middle Neighborhood in Cleveland?
How do we identify a Middle Neighborhood?
How do we stabilize and grow Middle Neighborhoods?
CLEVELAND MIDDLE NEIGHBORHOODS What is a Middle Neighborhood?
“Not in deep distress, but not thriving either.” - Paul Brophy
“Middle neighborhoods are neighborhoods that have retained a respectable measure of both their physical and social fabric, are not or not yet areas of highly concentrated poverty or hyper vacancy, and where stabilization and gradual improvement remain realistic strategies.” CLEVELAND -Alan Mallach MIDDLE NEIGHBORHOODS Distressed Luxury Middle Neighborhoods Neighborhoods Neighborhoods
Market Inefficiencies, Federal Funding and Deteriorating Housing Private Capital & Programs Market Rate
CLEVELAND MIDDLE NEIGHBORHOODS Strong Market Declining Value Activity Minimal Investment Private Investment Redevelopment Equitable Strategies Needed Development Needed
Weak Demand, Limited Investment CLEVELAND Targeted Support can Spark Recovery MIDDLE NEIGHBORHOODS Defining “Neighborhoods”
CLEVELAND WARDS
CLEVELAND MIDDLE NEIGHBORHOODS Defining “Neighborhoods”
CLEVELAND CDCs
CLEVELAND MIDDLE NEIGHBORHOODS Defining “Neighborhoods”
CLEVELAND CENSUS TRACTS
CLEVELAND MIDDLE NEIGHBORHOODS What is a Middle Neighborhood?
What is a Middle Neighborhood in Cleveland?
How do we identify a Middle Neighborhood?
How do we stabilize and grow Middle Neighborhoods?
CLEVELAND MIDDLE NEIGHBORHOODS 2019 Regional Property Sales ($/ft2) Data: NST, Zillow (non-estimates) Cleveland Average: $74 Regional Average: $111
Select Suburbs Luxury Neighborhoods
Solon: $139 Ohio City: $190 Shaker Heights: $108 Tremont: $226 Beachwood: $154 Detroit Shoreway: $305 Lakewood: $144 Strongsville: $113 Distressed Neighborhoods Chagrin Falls: $154 Union Miles: $30 Lee-Seville: $24 CLEVELAND MIDDLE NEIGHBORHOODS Regional Housing Market 350 Neighborhood Price Sq/ft (2019 Q4)
300
250
200
150
100
50
0 Cleveland Housing Market 350 Neighborhood Price Sq/ft (2019 Q4)
300
250
200
150
100
50
0 Regional Housing Market 350 Neighborhood Price Sq/ft (2019 Q4)
300
250 Middle Markets 200
150
100
50
0 Vibrant Neighborhood Growing Stable Market Rate
Stagnant Market
Vulnerable (Middle Neighborhoods) Threatened Neighborhoods
Deteriorating, Subsidized
Severely Distressed Critical Majority Vacant
CLEVELAND MIDDLE NEIGHBORHOODS What is a Middle Neighborhood?
What is a Middle Neighborhood in Cleveland?
How do we identify a Middle Neighborhood?
How do we stabilize and grow Middle Neighborhoods?
Next Steps CLEVELAND MIDDLE NEIGHBORHOODS Regional Housing Market 350 Neighborhood Price Sq/ft (2019 Q4)
300
250 Middle Markets 200
150
100
50
0 Edge Communities 120 Neighborhood Price Sq/ft (2019 Q4) 100
80
60
40
20
0 Cleveland Neighborhood Demand Index – (14) Indicators to be used to define clusters
Category Indicator Geography Time frame
Housing sales and transfers Median arms-length sales of residential properties Block groups - County 2017-2019
$/SQFT2 (median) Block groups - County 2017-2019
Variation in median arms-length sales price of residential properties Block groups - County 2017-2019
Mortgage, tax, and BOR foreclosures on residential properties Block groups - County 2017-2019
Velocity of sales- how often properties turn over Block groups - County 2017-2019
Other housing attributes % probable rental, of residential properties Block groups - County 2017-2019
% vacant residential structures Block groups - County 2017-2019
% privately held rental properties with HCV, of residential Block groups - County 2017-2019
% subsidized housing/ project based section 8, of residential Block groups - County 2017-2019
% CMHA housing- housing estates owned by CMHA Block groups - County 2017-2019
Land use % Commercial (non- apartment) Block groups - County 2017-2019
% residential vacant land Block groups - County 2017-2019
Housing Demolitions Block groups - County 2017-2019 investment/interventions CLEVELAND Permits >$10k, new construction, and/or "rehab" permits Block groups - County 2017-2019 MIDDLE NEIGHBORHOODS Neighborhood Demand Index (NDI)
CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS Potential Middle Neighborhood Targets
CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS Homes Sold Over $150K (Since 2014) Homes Sold Over $100K (Since 2014) Homes Sold Between $60K - $100 Homes Sold Between $0.01 - $60K CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS Middle Neighborhood CLEVELAND Strategic Focus MIDDLE NEIGHBORHOODS CLEVELAND Commercial Properties MIDDLE NEIGHBORHOODS CLEVELAND No Canopy (<5%) MIDDLE NEIGHBORHOODS Lee Harvard
CLEVELAND MIDDLE NEIGHBORHOODS Bellaire Puritas
CLEVELAND MIDDLE NEIGHBORHOODS What is a Middle Neighborhood?
What is a Middle Neighborhood in Cleveland?
How do we identify a Middle Neighborhood?
How do we stabilize and grow Middle Neighborhoods?
CLEVELAND MIDDLE NEIGHBORHOODS Policy Examples
Market Type Public Action
Regional Choice Asset Promotion High Value
Steady Transitional Asset Preservation
Stressed Reclamation Asset Development
CLEVELAND MIDDLE NEIGHBORHOODS R Connecting Policy & Programs to Markets
Regional Strong Steady Transitional Distressed Reclamation ChoiceA B C D E Demolition of Dangerous Properties
Targeted scale Acquisition/Rehab
Tree Plantings/Dead Tree Removal
Land Assembly for Redevelopment
Tax Abatement/Construction Subsidy
Quality of Life Code Enforcement (HHI)
Abandoned Car Removal
Nuisance Abatement
High Priority Medium Priority CLEVELAND Low Priority MIDDLE NEIGHBORHOODS Limited Activity Tax Abatement Strategy
CLEVELAND MIDDLE NEIGHBORHOODS HousingNOLA (70 Neighborhoods – 5 Typologies)
2015 Market Value Study 459 Census blocks – 9 Market Clusters
CLEVELAND MIDDLE NEIGHBORHOODS 4 1 Overlay Market Analysis with Housing Study
160 6 14 140 19 120 5 8 27 5 100 4 # of 23 13 Census 80 4 9 37 Blocks 60 29 1 7 25 44 40 21 5 24 20 11 29 29 6 12 23 0 2 21 5 7 Obsolete Distressed Limited Updates Renovation+ Modernized A B C D E1 E2 F G H CLEVELAND MIDDLE NEIGHBORHOODS 4 2 Comprehensive Middle Neighborhoods Tool-Kit
High LTV Loans Capital Access for Non- Great Streets & Acquisition Rehab Profits Infrastructure Refi-Rehab Model-Block Investment Targeted Economic Development Construction Gap Storefront Renovation Subsidies and Commercial Public Services Tax Abatement/Credit Beautification CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS
CLEVELAND MIDDLE NEIGHBORHOODS CLEVELAND MIDDLE NEIGHBORHOODS Challenge for Developers: Rehab and Construction Gap
Sales Price $135,000
Acquisition REHAB PROFIT
$10,000 $80,000 $45,000
Acquisition REHAB GAP
$65,000 $80,000 $10,000
CLEVELAND MIDDLE NEIGHBORHOODS Competition Cycle of Decline from Suburbs
Decline in Neighborhood Appeal Decreased Demand
Deferred Maintenance Stagnant Market
Reduction in Homeownership Decline Property Values CLEVELAND MIDDLE NEIGHBORHOODS Investors in the Middle
MIDDLE MARKETS (NEO) EDGE MARKETS (CLE)
For Profit Developers Non Profit Developers (Rehab and New Construction) Limited Income Homeowners New Homeowners
LLC Investors LLC Investors CLEVELAND MIDDLE NEIGHBORHOODS Naturally Occurring Affordable Housing
Family of Four Old Brooklyn Maximum Debt $ 1,905.34 (2017 ACS) Student Loan Debt $ 400.00
Car Payment $ 380.00 Gross income $ 57,160.13 Min. Credit Card Payment $ 50.00 After Fed Tax $ 46,808.00 Housing Debt X
Monthly $ 3,900.67 Total Debt $ 830.00
CLEVELAND MIDDLE NEIGHBORHOODS Naturally Occurring Affordable Housing
Maximum Debt $ 1,905.34 Housing Cost Student Loan Debt $ 400.00
Loan Amount $ $135,000.00 Car Payment $ 380.00
Annual Interest Rate 0.0425 Min. Credit Card Payment $ 50.00
Life Loan (in years) 30 Housing Debt $ 1,047.99
Payment per Period $664.12 Total Debt $ 1,877.99
Tax Estimate $313.88
Hazard Ins. $70.00
Monthly Housing Payment $1,047.99 CLEVELAND MIDDLE NEIGHBORHOODS Challenge for New Homebuyers: Obsolete Housing Stock
Home Detail Market Demand Cleveland Avg. Supply
# of Bedrooms 4 3
# of Bathrooms 1.5+ 1
Size 1,900 Sq Ft 1,200 Sq ft
Kitchen Newly Renovated Needs Renovation
Yard/Lot .25 acre .11 acre
Systems Recently Updated/New Most need updates
Garage 2+ Car – Built post 1970 2 Car – Built 1950s
Electrical Updated/Romex Knob & Tube CLEVELAND Windows/Doors Vinyl, Eco-Value Pulley, Wood, Lead issues MIDDLE NEIGHBORHOODS Housing Market Supply and Demand Supply Demand
Structural Substantial Homeowner New Construction Rehab Updates “Fixer-Upper” Fully Renovated CLEVELAND MIDDLE NEIGHBORHOODS